INVESTMENT EXCHANGES AND CLEARING HOUSES: STAMP DUTY

HC Deb 15 July 1991 vol 195 cc28-9

'.—(1) The Treasury may make regulations providing as mentioned in this section with regard to any circumstances which—

1. (a) would (apart from the regulations) give rise to a charge to stamp duty,
2. (b) involve a prescribed recognised investment exchange or a prescribed recognised clearing house, or a member or nominee (or member or nominee of a prescribed description) of such an exchange, or a nominee (or nominee of a prescribed description) of such a clearing house, or a nominee (or nominee of a prescribed description) of a member of such an exchange, and
3. (c) are such as are prescribed.

(2) The regulations may provide that the charge to stamp duty shall be treated as not arising or (depending on the terms of the regulations) as reduced.

(3) Regulations under this section—

1. (a) shall be made by statutory instrument subject to annulment in pursuance of a resolution of the House of Commons;
2. (b) may include such supplementary, incidental, consequential or transitional provisions as appear to the Treasury to be necessary or expedient;
3. (c) may make different provision for different circumstances;
4. (d) may make any provision in such way as the Treasury think fit (whether by amending enactments or otherwise).

(4) In this section—

1. (a) "prescribed" means prescribed by the regulations,
2. (b) "recognised investment exchange" means a recognised investment exchange within the meaning of the Financial Services Act 1986, and
3. (c) "recognised clearing house" means a recognised clearing house within the meaning of that Act.'.—[Mr. Maude.]

Brought up, and read the First time.

Mr. Maude

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this it will be convenient to take Government new clause 17.

Mr. Maude

New clauses 17, 18 and 19 flow from the proposed merger of the London traded options market and the London international financial futures exchange, which, it is hoped, will take place later this year to form the London derivatives exchange. New clauses 17 and 18 give power to the Treasury to make regulations about stamp duty in connection with the proposed merger. At present, the traded options market is part of the stock exchange and present legislation reflects that. The merger of the options and futures markets will change that basic structural fact. The legislation will have to be adapted to fit the new exchange if the existing tax reliefs are not to be lost. We are giving careful consideration to exactly what changes may be required. Given that the new structures are not yet totally clear, it is not possible to form final judgments on that point.

The new clauses provide enabling powers so that we can make the necessary changes by regulation at the appropriate time.

Dr. John Marek (Wrexham)

Before asking the Minister a brief question about the new clauses, I should like to advise him that the Opposition recognise the need for them given that the London derivatives exchange will be different and, unless the new clauses are passed, will operate under a different tax regime from the existing two institutions. As the notes on clauses state, the powers that will be sought and the regulations that will be applied are rightly wholly relieving, as the London derivatives exchange will be liable to extra tax without such relieving powers. We recognise, therefore, that the new clauses are necessary to ensure that the position does not change.

What does the Financial Secretary intend to do under the regulations? Does he intend to bring in new reliefs or does he intend that the position should be broadly the same? Stamp duty and stamp duty reserve tax are due to be abolished in any case when TAURUS—the transfer and automated registration of uncertified stock—comes on stream, so I am not including that in my question. I should, however, appreciate any help that the Financial Secretary can give on this point.

Mr. Maude

I can confirm to the hon. Gentleman that it is our intention simply to reflect existing reliefs in the provisions because if we did not make provisions, such as we are giving ourselves the power to make under the new clauses, under the merger that we expect to take place, the reliefs might disappear and would not be available. Our intention is simply to replicate the existing provisions as far as possible and to enable them to be applied sensibly to the new circumstances of the new derivatives exchange.

Question put and agreed to.

Clause read a Second time, and added to the Bill.