XN000022-1989-11-15 — Page 4

WEDNESDAY, NOVEMBER 15, 1989

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2

11

STAMP DUTY AMENDMENT BILL INTRODUCED

1989, WHICH SEEKS TO GRANT INVOLVE THE BORROWING AND

THE STAMP DUTY (AMENDMENT) BILL STAMP DUTY RELIEF FOR TRANSACTIONS WHICH LENDING OF HONG KONG STOCK FOR THE PURPOSE OF SETTLING A LEGITIMATE SALE. WAS INTRODUCED INTO THE LEGISLATIVE COUNCIL TODAY (WEDNESDAY}.

!

MOVING THE SECOND READING OF THE BILL, THE FINANCIAL SECRETARY,

UNDER THE HON SIR PIERS JACOBS, SAID THAT

EXISTING LEGISLATION ANY STAMP DUTY AT PERSON WHO BORROWED OR LENT STOCK WAS REQUIRED TO PAY THE RATE OF 0.3 PER CENT OF THE VALUE OF THE STOCK FOR EACH TRANSACTION.

"THE TOTAL STAMP DUTY PAYABLE FOR EACH COMPLETED STOCK

THE RETURN BORROWING TRANSACTION, INCLUDING

OF THE

ΤΟ STOCK

THE BORROWER, IS THEREFORE 1.2 PER CENT OF THE VALUE OF THE STOCK.

"THIS IS THE SAME DUTY AS THAT PAYABLE IN RELATION TO AND OUT TRANSFERS OF STOCK, SIR PIERS SAID.

F

TWO OUT

EXPLAINING THE PURPOSE OF THE BILL, SIR PIERS SAID THE SECURITIES REVIEW COMMITTEE POINTED OUT IN MAY LAST YEAR THAT STOCK BORROWING WAS A WELL-TRIED AND INTERNATIONALLY USED METHOD TO RESOLVE TEMPORARY SETTLEMENT PROBLEMS.

"THE COMMITTEE WENT ON TO RECOMMEND A CONCESSION ON STAMP DUTY FOR TRANSACTIONS WHICH WERE USED AS A MEANS OF EXPEDITING SETTLEMENT," HE SAID.

THE RECOMMENDATION WAS ACCEPTED BY THE ADMINISTRATION, SIR PIERS, SAID NOTING ALSO THAT HE HAD INDICATED IN HIS BUDGET SPEECH

BILL EARLIER THIS YEAR THAT HE WOULD INTROUDCE A

PROVIDING FOR THE EXEMPTION FROM STAMP DUTY OF SPECIFIC STOCK BORROWING AND LENDING TRANSACTIONS.

HE SAID THAT SINCE STOCK BORROWING EXPOSED THE LENDER AND IMPRUDENT STOCK LENDING UNDERMINED MARKET INTEGRITY, NECESSARY FOR SUCH TRANSACTIONS TO BE PROPERLY CONTROLLED.

то RISK

IT WAS

"IT IS INTENDED THAT THE STATUS OF 'APPROVED BORROWER' AS DEFINED FOR THE PURPOSES OF THE CONCESSION SHOULD IN

BE GENERAL RESTRICTED TO MEMBERS OF THE STOCK EXCHANGE, AND THAT AS APPROVED BORROWERS THEY WOULD BE REQUIRED TO KEEP RECORDS AND FURNISH RETURNS RELATING TO THEIR STOCK BORROWING ACTIVITIES. SIR PIERS SAID.

OF

THE SECURITIES AND FUTURES COMMISSION AND THE STOCK EXCHANGE WERE CURRENTLY DISCUSSING THE ESSENTIAL FEATURES

A PROPER REGULATORY SYSTEM FOR STOCK BORROWING ACTIVITIES.

"IF THIS BILL IS PASSED ITS PROVISIONS WILL NOT BE BROUGHT

INTO OPERATION UNTIL A SYSTEM OF CONTROL SAID.

HAS

BEEN

ESTABLISHED,

/TURNING TO

HE