Cut In HK Securities Trading Levy Goes Before Legislative Council

by Mary Swire, for LawAndTax-News.com, Hong Kong

20 June 2006

The Securities & Futures (Reduction of Levy) Order 2006, which provides for a 20% reduction of the levy payable in respect of any trading in securities, futures or options contracts in Hong Kong, was gazetted on Friday, and will be tabled at the Legislative Council on June 21.

Subject to negative vetting, the order will be effective from December 1.

The Financial Services and the Treasury Bureau stated that by reducing the transaction cost borne by investors, the proposed levy reduction will be conducive to the development of Hong Kong's securities and futures markets. It is estimated that the proposal will reduce the transaction cost to the market by about $88 million a year.

Under the order, the levy payable by a seller or a purchaser in respect of the consideration for a sale and purchase of securities, pilot programme securities,or exchange traded funds will be reduced from the current rate of 0.005% to 0.004%.

The levy payable in respect of the consideration for a sale and purchase of a futures contract will be reduced from the current amount of $1 to 80 cents, while the levy payable in respect of the consideration for a sale and purchase of a Mini-Hang Seng Index Futures Contract, a Mini-Hang Seng Index Options Contract, a stock futures contract, or an option on such a contract will be reduced from 20 cents to 16 cents.

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