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KAI RYSSDAL: New York City Mayor Michael Bloomberg was in London earlier this week. The mayor and other New York politicians are worried the Big Apple’s losing its edge in global finance. They say companies are taking their business overseas rather than deal with strict new accountability laws here in the States. Laws like Sarbanes Oxley that went into effect after the Enron debacle. London’s won a lot of the money that has moved out of New York. So businesses aren’t too excited about a possible European version of Sarbanes-Oxley. From London, Marketplace’s Stephen Beard reports.

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STEPHEN BEARD: In some ways London is now the world’s top financial center. There are more foreign banks here than in any other city including New York. The London stock market has the most foreign listings. But London could lose that global lead if a new European law comes into force unamended, says economist Andrew Hilton.

ANDREW HILTON: It could actually drive companies away from London in particular. Rather as Sarbanes-Oxley drove companies away from New York. This piece of legislation could have unintended adverse consequences for London in particular.

The new law is the Eighth Company Law Directive on Statutory Audit. Sounds boring but it was prompted partly by one of the most colorful villains ever to appear on Britain’s financial scene.

“MAXWELL”: Good evening ladies and gentlemen and welcome. Tonight you are all the guests of Robert Maxwell.

Maxwell, the subject of this comic opera, was a media magnate who plundered several large companies and then apparently jumped off his yacht and drowned in the Mediterranean. This and other scandals led to calls for a tightening up of auditing rules. The Eighth Directive is the long delayed result. But, says Damien Rees, financial editor of the Daily Telegraph, there’s a problem.

DAMIEN REES: What it basically does is put a lot more onerous rules and regulations on foreign companies that want to list on either the London stock market or Paris or any of those big, European bourses.

As the directive stands, a foreign company wanting to list in Europe may need to have their auditor vetted and recognized by a European regulator. And perhaps have an additional audit. A bureaucratic nightmare, says Rees, and just when the U.S. is waking up to the error of its ways.

REES: The mood music there is very much for beginning to roll back the tide of regulation. And Sarbanes-Oxley is obviously under intense scrutiny in terms of it being reformed and made somewhat more realistic.

The London Stock Exchange is less worried about the Eighth Directive. Spokesman Adam Kinsley says there’s a new consultation process. The directive will be amended. The regulation will be loosened. He says Europe is learning from America’s mistake.

ADAM KINSLEY: We’ve seen what can happen with unintended consequences of legislation. And that’s understood all too well in Europe. So we’re very keen not to fall into the same traps.

Well, Britain certainly is. Of all the E.U. countries it has by far the most to lose. Most of other member states don’t have international financial centers. And, say the cynics, those that do — like Paris and Frankfurt — are rather jealous of London and might rather enjoy seeing the Brits knocked off their perch. Europe, they say, could still saddle itself with its own homegrown Sarbanes-Oxley.

In London, this is Stephen Beard for Marketplace.