§ Mr. Matthew Banks
To ask the Chancellor of the Exchequer if he will make a statement on the progress of his proposals for stamp duty on share trading. 
§ Mr. Kenneth Clarke
I announced on 24 July 1996 that I intended to replace the current stamp duty on exemptions for market makers and broker dealers on the London stock exchange with a new relief for purchases made on any UK recognised investment exchange or European Economic Area regulated market by any firm fulfilling the role of intermediary on that exchange. The new regime would apply to all UK shares on which stamp duty is levied. Following detailed consultation by the Treasury over the last three months, I have now decided that it is not necessary to confine the relief available to intermediaries to purchases which are offset by sales within a given period. The introduction of such a time limit would impose additional compliance costs on firms; it would encourage a new type of tax-driven trading; and it would do little, if anything, to protect the revenue from stamp duty on shares.
My central expectation is that the proposed new regime, without a time limit, should deliver broadly the same yield from stamp duty on shares as the current regime. However, in order to guard against any potentially significant losses in revenue which may emerge on the introduction of the new tax regime and the stock exchange's new trading system, I propose to take reserve powers to impose a non-zero rate of stamp duty on share purchases and other defined classes of transactions by intermediaries. These powers could be activated to prevent against loss of revenue arising from abuse of the extended relief for intermediaries' transactions.
As well as replacing the current reliefs for stock exchange market makers and broker dealers, the proposed regime would also replace the existing stamp duty reliefs for market makers and principal traders on the London International Financial Futures and Options Exchange. Stamp duty relief would be available to LIFFE equity options intermediaries for equity purchases on other exchanges of the stocks in which LIFFE trades an option and the purchase is made on a recognised investment exchange or an EEA regulated market. LIFFE intermediaries would not necessarily have to become intermediaries on other exchanges in order to gain relief.
Detailed provisions, reflecting these proposals, will be brought forward for the 1997 Finance Bill, with a view to implementing the new regime as soon as is practicable during 1997–98.7W