Shock probe into Exchange charges

THE London Stock Exchange sprang a shock by revealing that the Office of Fair Trading is probing the 30% increase in annual fees for listed companies pushed through in the face of a full-scale bear market last year. The rise boosted the Exchange's revenue by around £10m.

LSE shares fell 31 1/4p to 337 3/4p as analysts pointed out that the OFT move steps up the regulatory risk faced by the Exchange and questions its pricing power.

'It could ultimately lead to a review of pricing by the Competition Commission,' warned Merrill Lynch analyst Manus Costello, declaring that the highly-rated shares 'are not offering great value'.

The Exchange says its fees are well below those of overseas exchanges. It is negotiating with the regulator and expects an outcome shortly.

But the probe casts a giant shadow over results from the LSE, which show profits up £1m at £41.7m, and an 8% rise in the interim dividend at 1.4p.