§ Mr. Richard ShepherdTo ask the Chancellor of the Exchequer what tax changes are proposed for the new market formed from the merger of the London International Financial Futures Exchange and the London traded options market.
§ Mr. MaudeThe rules for certain tax reliefs which are available at present to market makers in traded options assume that the London traded options market is part of the stock exchange. When the proposed merger of the London trade options market with the London International Financial Futures Exchange takes place, this will no longer be so. New regulations will he made to adapt the present reliefs accordingly, and to widen them in some respects to take account of the structure of the new market, once the arrangements for the merger have been finalised.
The new regulations will provide stamp duty and stamp duty reserve tax reliefs for members of the new merged market acting as principal traders in equity options. The reliefs will apply, within certain prescribed limits, to transactions in equities which are necessary to hedge positions in options to buy or sell securities which members enter into on their own account and not on behalf of clients.
Stock lending reliefs, and exemption in certain circumstances from the anti-bondwashing legislation, will also apply to such transactions and to transactions where stock is borrowed or purchased to meet a delivery obligation arising from the exercise or assignment of an option, again within certain prescribed limits.
For members of the merged market acting as principal traders in option contracts regulations will be made to place them on a comparable basis to Stock Exchange market-makers when required to manufacture a dividend.