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The head of the New York Stock Exchange has launched a blistering attack on the lack of regulation surrounding the London Stock Exchange’s junior Aim market.

John Thain, chief executive of the NYSE, criticised the junior market for its lack of corporate governance standards. Mr Thain, speaking at the World Economic Forum in Davos, Switzerland, said he felt Aim “did not have any standards at all and anyone could list”.

Although he believed it was beginning to change its approach, he added that London “had to be careful not to damage its reputation by allowing in companies that are not well run”.

He also said that he felt that neither the LSE’s Official List nor Aim had such a strict approach to corporate governance as his own NYSE or Nasdaq, which is currently trying to buy the LSE. Many in London do not want an American takeover because they fear overly-stringent regulations, such as Sarbanes-Oxley, may be forced to apply to UK-quoted companies.

Telegraph.co.uk: NYSE chief attacks Aim

Clara Furse, chief executive of the London Stock Exchange, plans to keep Nasdaq at bay, and on Thursday, she put money on it.

Furse has said privately in recent weeks that she would prefer to keep the exchange from Nasdaq’s clutches, and then promote its liberty from U.S. regulators after its rival Euronext pairs up with the New York Stock Exchange.

On Thursday, the London exchange pledged to buy back as much as £250 million, or $493 million, in shares this year, an offer that would increase the exchange’s debt load enough for Moody’s to put the stock on review for a possible downgrade. The London exchange also reiterated that Nasdaq’s offer of £12.43 a share was “wholly inadequate,” and Furse said that she was in talks with other exchanges, but would not specify which.Furse and the London exchange have been under siege since Nasdaq formally initiated its hostile £2.7 billion buyout offer in December.

Furse and the London board have refused to speak with their Nasdaq counterparts and vehemently rebuffed the bid in public, leaving the market wondering whether they were fishing for a higher price — common action in a hostile deal — or running scared.

Neither may be the case. In December, Furse told advisors that her best- case outlook would be to fend off Nasdaq, then use fear of the long arm of U.S. regulation to market the London exchange to new customers, after Euronext and the New York Stock Exchange agreed to pair up this year, according to a person briefed on the talks.

Whether Furse can hold off its hedge fund investors, who are putting pressure on the London exchange to cut a deal with Nasdaq, is unclear. Nasdaq, which already owns 28.8 percent of the London exchange, needs a simple majority, or just over 50 percent, to take control. Short-term investors, including hedge funds and the corporate raider Samuel Heyman, own an estimated 30 percent of the stock and will be instrumental in any deal.

Regulatory creep is a big worry for investors and public company executives as trans-Atlantic alliances create more global markets.

The NYSE chief executive, John Thain, has pledged that U.S. regulators will regulate only within American borders after the merger with Euronext, and that the pan-European exchange will keep its French and Dutch regulators. But many European investors are skeptical.

No matter what Americans say, some argue that the reach of the Sarbanes- Oxley law on corporate governance could create a situation where directors and company executives who list on any exchange allied with an American one are liable to lawsuits or tough U.S. rules that provide for prison sentences.

The London exchange has been a big draw in recent years for emerging-market players, who have been scared off from U.S. markets. Thain has been pressing for changes to Sarbanes-Oxley rules.

IHT: London Stock Exchange to buy back shares to fend off Nasdaq

1: Ed Balls - Economic secretary to the Treasury

Ed Balls is often tipped as a future chancellor. The good news is that he appears to understand how the profession works. Balls has been the driving force behind moves to prevent the London Stock Exchange from being hampered by the Sarbanes-Oxley Act in 2006 and has moved towards establishing better financial controls within the European Union. He may not be hugely significant now, but 2007 is certain to herald greater things for this youthful political star.

AccountancyAge: The Top 50 financial power list 2007

The threat of foreign ownership has promted the government to rush through Sarbox protection legislation for the London Stock Exchange.

Last year, the volumes and values of European IPOs outstripped US activity for the first time in four years – as companies moved to avoid the onerous requirements of Sarbanes-Oxley.

And a senior director of US stock exchange Nasdaq has admitted that Sarbanes-Oxley has damaged its ability to attract new listings. The exchange is now frantically lobbying the US authorities to revise the regulatory rules.

AccountancyAge:Can the government protect the LSE from Sarbox?

Details of a plan to protect the UK from Sarbanes-Oxley are set to be unveiled this week in the Queen’s Speech on Wednesday.

The Clearing House and Banking Bill - which should be in force within a year - is designed to overcome fears that a London Stock Exchange takeover by a US exchange could allow stringent US regulation to be enforced in the UK, the Financial Times reported.

The bill, consisting of 12 clauses, is said to be politically non-contentious. Economic secretary Ed Balls said it was government’s ‘agreed and clear intention’ to get the legislation on to the statute books as quickly as possible.

Sarbox protections due in Queen’s Speech

Critics of the Sarbanes-Oxley Act have called for action before the powerful US legislation encroaches on Europe’s borders.

A ‘regulatory creep’ scenario is feared because Sarbox’s stringent Section 404 compliance and audit provisions could inadvertently find their way into the UK were the London Stock Exchange to be taken over by a US exchange.

Stateside regulators the Securities and Exchanges Commission (SEC) have tried to reassure concerned parties by increasing their co-operation with the Financial Services Authority.

SEC chairman Christopher Cox, said that neither the body, or their European counterparts would be work to avoid any potential ‘over-reach’ into related. Jurisdictions.

SEC allays concerns over ‘Sarbox ‘regulatory creep’