COMMENT:Stock Exchange has to find purpose for itself

"In the clubbable atmosphere of the 'old' City, Mr Lawrence's action is seen as a kind of betrayal, a wholly unnecessary washing of dirty linen in public."

Michael Lawrence, chief executive of the Stock Exchange, is a hard working and determined chap but precisely what he was trying to achieve by publishing his "private and confidential" letter to the Treasury is anyone's guess. If it was to endear himself to the Labour Party then he has most certainly achieved his purpose. Gordon Brown could hardly have hoped to find a more unlikely ally. Most of Mr Lawrence's membership remains perplexed, however. In the highly clubbable atmostphere of the "old" City, his action is seen as a kind of betrayal, a wholly unnecessary washing of dirty linen in public.

In his brief period as chief executive, Mr Lawrence has made some powerful enemies in the City; many have come to regard him as not much better than his predecessor, Peter Rawlins, though Mr Lawrence can hardly be accused of the sort of management failure that led to the Taurus fiasco. As we reported yesterday, there has been growing criticism of the exchange's lack of transparency in explaining to members how it arrives at the level of bonuses for senior staff.

Last week's decision to go public on the gencos row is cited as the most dramatic evidence yet of Mr Lawrence's tendency to shoot from the hip. He stands accused of bad judgement and not necessarily acting in members' best interests.

Some of this is just an entrenched establishment ganging up on an outsider. John Kemp-Welch, who is about as City establishment as they come, has notably failed to come to his aid. His chairmanship has so far been a passable imitation of the Invisible Man. But most of it is symptomatic of the exchange's failure to find a proper role and purpose for itself in the modern world.

If the exchange is now just a club, a trade association, then what Mr Lawrence has done in apparently kicking the membership that feeds him shows distinct death-wish characteristics. But if the exchange's purpose is also to act as a champion for investors, sometimes against the interests of its members, then Mr Lawrence has probably done the right thing.