UK Treasury says to 'expand choice, increase competition' in trading financials

UK Treasury says to 'expand choice, increase competition' in trading financials

	Published : Tue, 20 Feb 2007 09:44 By : Agencies Print this Story

LONDON (AFX) - The government has unveiled three steps to modernise the tax system to remove obstacles to competition and expand choice in trading financial instruments in the UK, said Treasury Economic Secretary Ed Balls.

The moves are designed to allow firms to benefit from the new opportunities offered by liberalisation of financial regulation in the EU, and specifically from the introduction of the Markets in Financial Instruments Directive (MiFID).

From November share transactions on a regulated market under MiFID will not have to be reported to the market or intermediaries to benefit from stamp duty relief.

Currently, relief from stamp duty is available for intermediaries that trade securities listed on the main market of the London Stock Exchange (LSE) only if they are members of the LSE and they report their trades to the LSE.

This will allow new providers of transaction reporting services to enter the market more easily. The government is today publishing draft clauses for consultation in advance of this year's Finance Bill.

Second, in addition to shares admitted to trading on a regulated market, it also intends to extend this approach to include shares admitted to trading on a Multilateral Trading Facility (MTF).

Currently, in order to benefit from stamp duty relief, intermediaries trading in such securities are required to report transactions to the market on which the securities are admitted to trade. The Government intends to remove this requirement, in order to further extend choice in transaction reporting.

However, the Financial Services Authority will consider any possible regulatory implications from this change and will provide an update on progress at the pre-budget report later in the year, Balls said.

Third, the government also proposes to modernise the definition of a Recognised Stock Exchange for tax purposes to allow shares traded on other regulated markets under MiFID to benefit from the same tax arrangements that currently apply only to the LSE in the UK.

This will allow shares listed by the UK Listing Authority and traded on a regulated market under MiFID to be held in an Individual Savings Account or to meet the listing requirement to be a UK Real Estate Investment Trust.

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