News of the investigation came as the LSE released half-yearly results showing stagnating turnover and a continued decline in information services and issue activity. The market reacted negatively to the news, marking the Exchange's shares down by 6.7% to 344 pence at mid-day from the previous day's close of 369 pence.

In a brief statement on the OFT investigation, the LSE says: "The Exchange is currently negotiating a resolution of this matter with the OFT and expects an outcome shortly."

The price increase is estimated to have contributed an additional £10 million in annual revenues to the LSE. With half-yearly turnover in line with the same period last year at £119.6 million, an enforced reduction in fees will be keenly felt.

Thanks to a combination of cost-cutting and fee increases, the Exchange succeeded in raising operating profit by three per cent for the period to £41.7 million and raised its interim dividend by eight per cent to 1.4 pence per share.

But new chairman Chris Gibson-Smith held out little prospects for an imminent upturn: "Although various market indices have risen since March, our financial performance is not directly linked to the level of the market and it may therefore take a period of time for benefits to be reflected in our main business areas. At present, we see a continuation of trends, in particular no significant improvement in the IPO market and terminal numbers remain under pressure."

At £50.2 million (2002: £50.7 million), information services was the largest contributor to turnover for the half year, representing 42% of total turnover. An increase in revenues from FTSE, RNS and the Exchange's new ProQuote business helped to offset a continuing decline in the number of terminals taking exchange data, which fell from 94,000 to 90,000 in the first half.

The LSE's travails pale into insignificance next to the US hi-tech exchange Nasdaq, which yesterday reported a $38 million third quarter loss, marked by a 40% year-on-year decline in transaction services revenues.