Finance Bill 2002
New Clause 20
Mr Chancellor of the Exchequer
To move the following Clause:-
(1) The Treasury may by regulations extend the application of the provisions mentioned in subsection (2) to any market (specified by name or description) that is not a recognised exchange but is prescribed by order under section 118(3) of the Financial Services and Markets Act 2000 (c.8).
(2) The provisions referred to in subsection (1) are -
sections 80A and 80C of the Finance Act 1986 (c.41) (stamp duty: exceptions for sales to intermediaries and for repurchases and stock lending); and
sections 88A and 89AA of that Act (stamp duty reserve tax: exceptions for intermediaries and for repurchases and stock lending).
(3) In subsection (1) "recognised exchange" means an EEA exchange, a recognised foreign exchange or a recognised foreign options exchange within the meaning of the provisions mentioned in subsection (2).
(4) Regulations under this section may provide for the application of the provisions mentioned in subsection (2) subject to any adaptations appearing to the treasury to be necessary or expedient.
(5) Regulations under this section shall be made by statutory instrument which shall be subject to annulment in pursuance of a resolution in the House of Commons.
EXPLANATORY NOTE
SUMMARY
1. The purpose of the new clause is to allow the stamp duty and stamp duty reserve tax exemptions for intermediaries and repurchases and stock lending to be extended to markets that are prescribed markets under section 118 of the Financial Services and Markets Act 2000 but which are not recognised exchanges as defined in the 1986 Finance Act.
DETAILS OF THE CLAUSE
2. Sub section 1 provides the Treasury with a regulatory power to extend the exemptions listed in sub section 2 to any market that, although not a recognised exchange, is a prescribed market under the provisions to prevent market abuse contained in section 118(3) of the Financial Services and Markets Act 2000.
3. Sub section 2 states that the exemptions are for intermediaries and repurchase and stock lending.
4. Sub section 3 defines a recognised exchange for the purposes of the clause.
5. Sub section 4 enables the exemptions to be applied subject to any necessary adaptations.
6. Sub section 5 provides that the regulations be made by statutory instrument.
BACKGROUND
7. Stamp duty or stamp duty reserve tax at 0.5% is generally paid when shares are traded. The exemption for intermediaries reflects the role that they perform in providing liquidity to the market. Repurchasing and stock lending is used by intermediaries to help them match the supply and demand for shares.
8. The Government intends that the new power be used shortly after Royal Assent to extend the benefit of these reliefs to OFEX, a market for trading unlisted and unquoted shares. OFEX is not a recognised exchange but is a prescribed market under section 118(3) FSMA 2000.