UK Treasury to expand choice, increase competition in financials trading UPDATE

UK Treasury to expand choice, increase competition in financials trading UPDATE

	Published : Tue, 20 Feb 2007 13:44 By : Agencies Print this Story

(adds Balls quotes)

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).

Balls made the announcement at a meeting with European Commissioner for internal market and services Charlie McCreevy and the so-called 'high level group' of City heavyweights.

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 tax 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, it also intends to make shares admitted to trading on a Multilateral Trading Facility (MTF) eligible for stamp duty tax relief.

Currently, in order to benefit from stamp duty tax breaks, 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 are cognised 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.

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.

'The opening up of financial markets in the EU is a great opportunity for the UK. With the measures I am announcing today, the structure of the UK tax regime will reinforce the more open and competitive trading environment that we are creating in Europe,' Balls said.

He added that the UK is the only major financial centre in the EU to transpose the MiFID directive into domestic law.

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