Round-up of Wednesday's business pages

LONDON (Reuters) - Here is a summary of the main stories in Wednesday's business pages.

Financial Times

MORTGAGE MARKET UNLIKELY TO RECOVER SOON

In an interim report produced with the Treasury, the former chairman of HBOS HBOS.L, Sir James Crosby, said the capacity of lenders to make mortgage advances was "severely constrained", and warned that the mortgage market was unlikely to recover in the next three years.

The mortgage market could be improved by new issuance of wholesale mortgage-based securities, however, Crosby said he found no quick fixes to address the market problems.

The report coincided with figures from the Bank of England revealing a fall in the number of mortgage approvals for those moving home in June to 36,000 from 41,000 in May, the lowest since comparable figures were first released in 1993.

8 ARRESTED IN FSA INSIDER DEALING PROBE

In a sign of a tougher approach to a problem the regulator believes is rife in the Square Mile and a threat to the integrity of the markets, officials from the Financial Services Authority, along with City of London Police, arrested eight people and raided premises in London and the South East.

Those arrested include workers at Swiss bank UBS (UBSN.VX) and JPMorgan Cazenove in what the FSA described as a "major ongoing investigation into insider dealing rings".

Cazenove said the arrested individual was a subcontractor employed by another company, while UBS confirmed that a "junior member of UBS's support staff in London" had been arrested.

INVESTORS PROPOSE CODE FOR RIGHTS ISSUE

The UK's biggest shareholders have proposed a shake-up in how rights issues are carried out to try to limit the kind of difficulties endured by banks in recent troubled fund-raisings.

The proposals, outlined in a letter to the FT from the heads of several leading UK fund managers, include a code of best practice that would require investors to cease betting on falls in the share price of companies going through rights issues if they act as sub-underwriters to the fund-raisings.

It would also provide limits to short-selling and stock lending. Led by Keith Skeoch, chief executive of Standard Life Investments, and Peter Chambers, chief executive of Legal & General Investment Management, the investors stated that the code would prevent sub-underwriters from selling borrowed shares during an offer period in anticipation of a fall in shares.

HEALTHCARE SPEND BOLSTERS CRODA

The cosmetic ingredients maker, Croda (CRDA.L), announced a sharp rise in profits on the back of higher glycerine prices and cost savings from the Uniqema acquisition.