City traders today appeared unanimous in their view that plans from Alistair Darling to bring in whistleblower laws to dealing rooms would not work.

The Chancellor plans to give the Financial Services Authority powers to grant immunity from prosecution in return for evidence about market manipulation. The move follows the crisis over HBOS shares last week, when rogue traders were accused by the Bank of England of spreading false rumours about the bank to make money by betting against the share price.

The Chancellor rejected plans for US-style plea bargaining a few years ago but today told the Guardian the government was convinced such a system was now necessary.

However, dealers said such a move would never work. One equities derivatives trader said: "There's no way anybody's going to squeal on their mates. Trading desks are close-knit teams. That's just not going to happen."

Another added: "All you'd get is the odd disgruntled employee bringing spurious cases."

Said one equities desk head: "It'd be a f****** nightmare round here if you had to watch every word you said for fear someone next door is going to shop you for something totally innocent. Maybe just because they don't like you, or something."

Another said: "Unless they've got an axe to grind, who's going to get on the phone to the FSA?" David Buik of BGC said: "These kind of rules might work in the US, but they won't work here. It isn't needed."

Under the proposals, FSA officials would be given "specified prosecutor status", which would allow them to grant immunity from prosecution in return for evidence against people suspected of market manipulation.