Trackers face ban from buying straight into new listings

Leading funds and the ABI are working on proposals to prevent newly listed companies from entering the FTSE 100 or other leading indices until after a three-month cooling-off period.

This would mean tracker funds would effectively be frozen out of the market for a new share issue for that period, the Financial Mail reports.

Some industry experts believe trackers create an automatic and artificial boost to the price of new companies coming to market.

These include commodities trading giant Glencore that floated at 530p last May and immediately became a FTSE member. Its shares later slumped to 347p and they ended last week at 445p.

Plans would need to be implemented by FTSE International. It declined to comment, but sources said it was under pressure from some investors to make the change, according to the Mail.

Iain Richards, regional head of corporate governance at Aviva Investors, said, "There needs to be a minimum breathing space between a company being listed and its entry into the FTSE."

But Ali Toutounchi, managing director at Legal & General, added: "A delay would remove what has historically been a successful way of creating liquidity for funds."