MPs and regulators joined forces yesterday to demand the government speed up the introduction of new market abuse rules.

UK financial regulators have been notoriously unsuccessful at prosecuting those who are suspected of manipulating stock markets by using insider information, passing on false rumours or other nefarious tactics.

Edinburgh bank HBOS was a victim in March when its shares fell more than 20% in a matter of hours after false rumours were spread that it was in financial difficulty. The government promised in the same month to bring in legislation to make it easier for legislators to pursue those suspected of illicit tactics, including US-style plea bargaining.

However, those close to the issue are nervous any proposed powers could be caught in a legislative log-jam.

John McFall, chairman of the influential House of Commons Treasury Select Committee, said: "I am told there could be some seizure in terms of getting the legislation through."

He added: "I am writing to the chancellor to get the legislation moved on."

He was backed by Financial Services Authority (FSA) chief executive Hector Sants, who said the regulator was keen to see the new rules as quickly as possible.

Sants said: "We do not think we are as well equipped as we wish to be in terms of taking prosecutions. We find the current level of market abuse, as best as we can measure it, unacceptable."

Sants believes that prosecutions of those guilty of market abuse are needed to deter others and wants to be able to negotiate plea bargains to strengthen his hand in tracking down the major wrongdoers.

FSA statistics showed "informed price movements", which indicate possible market abuse, before 28.7% of takeover announcements last year.

Meanwhile, in testimony to the committee, Sants confirmed that four of the five FSA managers who oversaw failed Northern Rock before it had to seek emergency government funding last summer have left the organisation.

One no longer acts in a supervisory capacity. However, he said that bonus levels at the FSA had been the same level last year as the year before.