London's Alternative Investment Market (AIM) lacks stringent corporate governance requirements and should keep raising its standards to avoid damaging the City's reputation, the head of the New York Stock Exchange (NYSE) said yesterday

John Thain, NYSE chief executive, told a media briefing at the World Economic Forum in Davos that he believed the London Stock Exchange (LSE) was changing its approach "particularly in relation to AIM, where they did not have any standards at all and anyone could list. I think they are starting to tighten up, and they should".

Mr Thain said that US exchanges such as the NYSE and Nasdaq took a tougher approach to corporate governance than the LSE and AIM, the junior market, and London "had to be careful not to damage its reputation by allowing in companies that are not well run".

His comments came as the Nasdaq stock market yesterday shut the door to any chance of it raising its £12.43 (€18.85) a share hostile bid for the London Stock Exchange, a day earlier than it had to. But its gambit, which should have knocked the share price, quickly failed as investors drove the price back up on expectations that another bidder would emerge.

Mr Thain, whose NYSE is often cited as a possible white knight bidder for the LSE, said he was too busy integrating his European acquisition, Euronext, and building bridges to Asia, to consider buying the London exchange soon.

He said yesterday that plans to link up with the Tokyo Stock Exchange would be released next week, but that a Euronext-style merger was not on the cards.

"Over time, it makes sense to have linkages with the Tokyo Stock Exchange . . . We are working at it," he told reporters on the fringes of the World Economic Forum. "I don't think it is very likely that anything with Tokyo is the same type of merger that we'll have with Euronext."

Mr Thain later said that details of the link-up with Tokyo would be made public next week.

The NYSE chief executive also said that full integration of the NYSE and pan-European exchange Euronext would take a year. - (Financial Times service)