In a letter to possible suitors of the London Stock Exchange, the Association of British Insurers has insisted that regardless of future ownership, Europe's biggest equity must remain subject to UK regulation.

The ABI wrote to the chief executives of Deutsche Boerse and Euronext following comments made by Callum McCarthy, chairman of the Financial Services Authority, which regulates the UK market. The FSA had called for greater public debate about the potential longer-term implications of any change of London Stock Exchange (LSE) ownership. Both Deutsche Boerse and Euronext have already made rival proposals to buy the LSE.

The ABI’s members rank among the UK’s top investors and hold more than a fifth of all investments traded on the LSE on behalf of millions of pensioners and savers.

Any transfer of its activities to another jurisdiction, which jeopardized the confidence engendered by the current regulatory arrangements, would be a serious setback, whenever it occurred, commented Peter Montagnon, director of investment affairs at the ABI.

Although both Deutsche Boerse and Euronext have made commitments to retain the LSE’s base in the UK, Mr Montagnon is understood to have requested further information on the details of this pledge.