US behaviour triggers alarm

INITIAL evidence suggests that the market timing abuse common in the US may also exist in Britain, the Financial Services Authority has revealed. Market timing occurs when outside investors trade in funds which price their units just once a day.

This allows outsiders to take advantage of market movements in between price fixing times.

David Eacott, of the FSA, said: 'It would be complacent to assume this sort of abuse has not happened here. Not all the data we collected from UK companies has conclusively said there is no market timing in the UK.' Separately, Amvescap, the US parent of Invesco Perpetual UK, admitted that it had engaged in 'controlled' late trading on some of its funds. It claimed this was in shareholders' best interests.

It said Invesco is facing civil enforcement actions from the Securities and Exchange Commission in the US.