The Financial Services Authority (FSA) is becoming increasingly aggressive in its battle against insider trading and market abuse, adopting techniques such as cold calling and demanding comprehensive records of traders’ activities.

Since reinforcing its commitment to tackling financial crime in a series of speeches and policy documents late last year, the FSA has begun phoning traders, brokers and investors without notice.

The FSA says this is a long-standing power used as part of a wider battle to curb market abuses, but market sources said the regulator has become more active in using it in recent weeks.

Ian Mason, a partner at law firm Barlow, Lyde & Gilbert, said the FSA was increasingly employing “SEC-type tactics” – a reference to the more aggressive approach to insider trading and other financial crimes adopted by the US Securities and Exchange Commission.

“The FSA are definitely upping the ante and trying to get the evidence while it’s hot,” Mr Mason, a former head of wholesale enforcement at the regulator, said.

The FSA declined to comment on specific cases of cold calling or whether the policy had been successful. Although regulated firms and individuals have a duty to cooperate with the regulator, they are under no obligation to answer immediate telephone questions.

Investigators will need to identify themselves and warn that the conversation is taking place under caution, which means its contents can be presented as evidence in court.

One adviser described the tactic as the FSA trying to “get in first before legal and compliance get involved and everyone turns shy”.

Sources said the FSA has also been making increasing use of powers to write to trading houses such as banks and hedge funds demanding specific details about individuals.

One person who advises banks said: “We’re seeing an increasing number of instances where the FSA is identifying a specific individual at a bank - or more commonly a hedge fund - and demanding details of all trades they have carried out, the names of all the counterparties involved plus transcripts of all telephone conversations the trader has made.”

Regulated firms are obliged to provide this information within a reasonable period, usually seven days, subject to negotiation. This week the FSA announced formal regulations for brokers to record all telephone calls involving equity, bond, and derivatives trades although the majority of large institutions already do this as standard.

Jonathan Herbst, a partner at Norton Rose, said the FSA was determined to prove that it means business in its fight for cleaner markets. Late last year, the regulator announced specific plans to crack down on hedge funds, many of which it said had unacceptably lax compliance procedures.

News of a more aggressive stance comes just weeks after the FSA launched its first criminal prosecution for insider dealing. In January it charged two employees of TTP Communications with trading company shares ahead of a £103 million bid from Motorola, the US telecoms company, in June 2006.

In November, the FSA made two arrests as part of a crackdown on foreign "boiler room" scams in which personal investors are sold worthless or non-existent shares by overseas brokers.

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