Now there are any number of ways with different cash markets convertibles warrants to say nothing of Liffe

Now there are any number of ways, with different cash markets, convertibles, warrants, to say nothing of Liffe, the London futures exchange and over-the-counter derivatives.The Stock Exchange is fighting to defend its central role as these other markets and rival exchanges gouge deep inroads This is not a problem peculiar to London. London, the most open of the big financial centres, is particularly sensitive to these forces as the giant US and continental houses, and international investors, exert their influence.The markets themselves are also far more fragmented. National dealing has given way largely to global trading, and the outside world - usually meaning the Americans - tends to shape the practices of international financial markets. The impending takeover of the third British merchant bank by a foreign institution underscores the international character of London. It is also an institution redolent with nostalgia; powerful fiefdoms drawing sustenance from the days when respect for the Stock Exchange was automatic and when the British traditions of the City went unquestioned.The reality of today's City could scarcely be more different. But like any trade association with a disparate membership, the LSE is an unwieldy vessel to trim. It is not always easy to win backing for investments that some members do not see of immediate benefit to themselves.

It spends far too much time looking over its shoulder and not enough defending its role in the radically different scene of the Nineties."No one is more acutely aware of the importance of keeping ahead of the times in the increasingly cut-throat environment of global finance than Mr Lawrence or John Kemp-Welch, the Exchange's chairman. "The Stock Exchange is finding it difficult to adjust to changed circumstances. She is near to completing her main strategic project - setting out the priorities for rebuilding the Stock Exchange's position and hoping to confound the growing ranks of sceptics in the City. "It is simply no longer a landmark institution in the City," says John Manser, chief executive of Robert Fleming, the investment bank. Unassuming, but already earning respect in the City for possessing a sizzling mind, Ms Wicker-Muirin is a direct challenge to the old Stock Exchange notables, some of whom would dearly love to soldier on with little regard for the world outside. In September 1994, Fields Wicker-Muirin, a 36-year-old American, was brought in as director of strategy by Michael Lawrence, the chief executive, to come up with some radical answers. Now, in rapidly changing markets, it is searching for a new role as its practices and position come under heavy fire.

Just 10 years ago, the Stock Exchange was the City, a concentration of unrivalled authority and over two centuries of tradition in one of the world's great financial centres. But then the Stock Exchange is all too aware, in those now immortal words of financial warning, that the past is no guarantee of future performance. YOU KNOW it is serious when the City's oldest gentleman's club turns to a no-nonsense young American woman to tell it where it should be heading. Secondly, if you are worried about political uncertainty affecting your investments, start putting cash under the mattress.For the next few months are going to be full of uncertainty, both here and overseas. We are now in that kind of world.It is one of the prices investors must pay for the pleasure of living in a low-inflation era, where debt actually has to be paid off, not inflated away by spendthrift governments.Patrick Hosking is on holidayHow the City's punters saw it last weekNumber of votes for each candidateTuesday Wednesday Thursday FridayMajor 192-197 183-188 182-187 189-194Abstentions 55-60 60-65 65-70 65-70Redwood 77-82 73-78 71-76 66-71Source: City Index. The economy is clearly slowing down fast, however, and my hunch is that the Fed will ease sooner than the markets now expect.What is not in doubt is, first, that what the Fed does over the next six months is likely to have a bigger impact on the UK stock market than almost any conceivable outcome of the Tory leadership election. Sentiment last week was moving towards the view that an interest rate cut was no longer likely this week, given the run of stronger economic data towards the end of last week.

The chairman, Alan Greenspan, has his job to consider.Next year is election year in the United States, always the hardest phase of any Fed chairman's tenure. Greenspan himself comes up for reappointment shortly, and it is no secret that not everyone on the Fed board sees eye to eye on what kind of treatment the US economy now needs. The political worry here is not so much about the Clinton Administration but about the internal politics of the Fed. In Japan, the fate of the stock and bond markets depends on when - and how - a weak government can bail out some of its crippled banks.In the United States, too, all eyes are on the Fed, which meets this week to decide whether it now needs to cut interest rates to avert a recession.