§ Mr. John GreenwayTo ask the Chancellor of the Exchequer if he will make a statement about the advice commissioned from the Securities and Investments Board on the regulatory implications of the proposed liberalisation of stamp duty on UK equity stock borrowing. [15317]
§ Mrs. Angela KnightThe Securities and Investments Board has submitted to the Treasury a report, "The fiscal liberalisation of stock borrowing and repo in UK equities; regulatory recommendations". This report was produced in response to a request from the Chancellor in September 1995, following the Director General of Fair Trading's report on the rules of the London stock exchange relating to market makers. Copies of the report are available in the Libraries of the House.
The Government fully accept the SIB's key recommendations that there is no immediate need to tighten or extend regulation in this area, but that further work on stock borrowing should be undertaken by the SIB, to cover guidance on good practice; the disclosure regime for short selling, and the stock borrowing regime for smaller companies.
The way is now clear for Parliament to consider the proposals set out in the Finance Bill for a sweeping reform of the current fiscal regime as it affects the lending and borrowing of UK equities. These proposals amount to a substantial liberalisation and modernisation of existing tax rules. Taken together with the SIB's proposed light regulatory touch, they should enhance the competitive development of this market, to the benefit of investors and market intermediaries alike.