THE London Stock Exchange's (LSE) defence against the OM bid is a disappointing document.

It is a reiteration of what it has already stated and contains nothing on where the exchange goes from here, although this is what everyone is waiting to

hear.

Obviously it should not

reveal its negotiating hand in

any detail, nor let slip how it intends to play one possible

bidder against another, but some formal indication of its think-

ing would have been welcome - and a defence document would have been the appropriate place for it.

The LSE might not want to do deals and would like to continue hiding behind the 4.9% shareholder limit, but deals are going to be thrust upon it and shortly, because a lot was riding on the publication of the defence document.

Judging by its performance so far, the exchange will wait until the OM bid fails, as it certainly deserves to, before moving on to the next stage. It is to be hoped the matter comes to a head earlier than this.

What we should be hearing is the LSE initiating discussions, using its self-proclaimed position as the pre-eminent European exchange, but we are more likely to hear that it is reacting to an approach, with Euronext possibly first off the mark.

The stakes are high and the LSE should be able to remain

on top, given the bargaining position it ought to have - ought to, because this power has been reduced by the collapse of the Deutsche Boerse merger and the forced departure of Gavin Casey as chief executive after a large minority of LSE shareholders voted against him.

Nevertheless, this should

not prevent the LSE from

driving a hard bargain from

any new bidder. After all, European consolidation cannot proceed without the LSE's full participation.