11
WEDNESDAY, JUNE 1, 1994
STAMP DUTY CONCESSION FOR STOCK BORROWING AND LENDING
* * * * *
THE STAMP DUTY (AMENDMENT) (NO.2) BILL 1994 AND THE INLAND REVENUE (AMENDMENT) (NO.2) BILL 1994 WILL BE INTRODUCED INTO THE LEGISLATIVE COUNCIL ON JUNE 15 TO RELAX THE STAMP DUTY CONCESSION FOR STOCK BORROWING AND LENDING ACTIVITIES, SECRETARY FOR FINANCIAL SERVICES, MR MICHAEL CARTLAND, SAID TODAY (WEDNESDAY).
THE FINANCIAL SECRETARY MENTIONED IN HIS BUDGET FOR 1994/95 STAMP THAT PROPOSALS WOULD SOON BE PUT FORWARD FOR THE EXEMPTION FROM DUTY OF STOCK BORROWED UP TO 12
THE TWO BILLS SERVE THIS
PURPOSE.
MONTHS.
NOT
AT PRESENT, A STOCK BORROWING AND LENDING TRANSACTION WILL GIVE RISE TO STAMP DUTY LIABILITY IF IT IS CARRIED OUT BY AN APPROVED BORROWER FOR THE SOLE PURPOSE OF SETTLING A SALE OF HONG KONG STOCK AND THE BORROWED EFFECTED IN THE STOCK EXCHANGE OF HONG KONG (SEHK) STOCK MUST BE RETURNED WITHIN 14 DAYS.
SUCH ARRANGEMENTS WERE
1989 то HELP RESOLVE TEMPORARY DELAYS IN THE WHERE THE STOCK IS HELD
GENUINE DELIVERY OF OVERSEAS.
SETTLEMENT
STOCK
INTRODUCED IN PROBLEMS CAUSED BY SOLD, FOR INSTANCE,
END, MARKET
MR CARTLAND SAID: "THE MEASURES WERE SATISFACTORY TO THAT BUT THE GOVERNMENT HAD NEVERTHELESS RECEIVED SUBMISSIONS FROM PRACTITIONERS THAT THE CURRENT STAMP DUTY RELIEF WAS TOO RESTRICTIVE FOR THE DEVELOPMENT OF THE STOCK BORROWING AND LENDING MARKET IN KONG WHICH IN TURN WAS CRUCIAL FOR THE SHORT-SELLING OF SECURITIES.
"THE SHORT STOCK RETURN PERIOD, THE SOLE AND THE NEED TO CONDUCT THE TRANSACTION THROUGH AN ARE THE MAJOR CONCERNS,
STOCK BORROWING
HE SAID.
IS A TOOL TO
HONG
PURPOSE REQUIREMENT APPROVED BORROWER
FACILITATE SHORT-SELLING OF SECURITIES FOR, SAY, HEDGING A LONG POSITION IN FUTURES/OPTIONS CONTRACTS.
SHORT-SELLING
THE SECURITIES ORDINANCE IN EFFECT PROHIBITS THE OF STOCKS UNLESS A BROKER OR HIS CUSTOMER CAN PROVIDE THE NECESSARY STOCK FOR SETTLEMENT. IF HE DOES NOT HAVE THE STOCK AT HIS DISPOSAL, HE WOULD HAVE TO BORROW IT IN THE MARKET.
THE SEHK INTRODUCED REGULATED LISTED SECURITIES IN JANUARY 1994.
SHORT-SELLING FOR SELECTED
THE HOWEVER,
STOCK BORROWING
AND LENDING MARKET AND
SHORT-SELLING HAVE REMAINED INACTIVE.
RESTS
THE PRIMARY REASON
WITH THE CURRENT RESTRICTIONS ON STAMP DUTY CONCESSION FOR STOCK BORROWING AND LENDING.
MONTHS
TO ADDRESS THE PROBLEM, THE STAMP DUTY (AMENDMENT) (NO.2) SEEKS TO EXTEND THE STOCK RETURN PERIOD FROM 14 DAYS TO 12 SUCH LONGER PERIOD THE COMMISSIONER OF INLAND REVENUE MAY ALLOW.
BILL
OR
/IT IS