So the trans-Atlantic slanging match has started over the pledge from Ed Balls, the economic secretary to the Treasury, to give Britain's Financial Services Authority, the City's main watchdog. more powers.

Balls wants to prevent the supposed creeping influence of Sarbanes-Oxley regulations. The purported aim is to protect UK-listed companies in the event of a Nasdaq takeover of the london stock exchange.

As John Pierce, chief executive of the Quoted Companies Alliance, put it: "We're very anxious that the London boat isn't rocked, and the bogey is Sarbanes-Oxley."

I must say, I was a bit perplexed by the so-called Balls Clause. For a start, everyone is expecting that some of the provisions of Sarbanes-Oxley might be eased back over the next 12 months. Secondly, one of things that attracts US interests to foreign investment is the prospect of getting away from the hard-line and ridiculously-flawed rules of Sarbanes-Oxley. And finally, global investment banks have to comply with rules of both countries. It's called globalisation.

To me, the Balls Clause smacks of political opportunism, particularly in the wake of the political furore over the fate of the NatWest Three, the British bankers extradited to Texas in relation to the collapse of Enron.

No surprises then that former Securities and Exchange Commission chairman Harvey Pitt has slammed the proposal as "unilateral turf protecting"

""What we need now is not unilateral turf-protecting activity but really collaborative discussions between regulators to figure out what the right solutions are to protect investors," Pitt said.

It makes sense. The flows of global capital are now growing with all the money pouring in from pension funds and institutions and that means regulators have to start creating some common ground.

The question remains whether Britain really has the ability to fend off American regulation if there is an exchange merger, says The Economist.

The journal notes that Balls now claims that Britain doesn't object to foreign ownership of foreign exchanges, just the imposition of foreign regulations. One London lawyer calls it "the Wimbledon
argument - it doesn't matter who wins, as long as they play it here".

And as The Economist says, the trouble with drawing lines in the sand is that the tide washes them away.