Bond Washing

New Clause 19 – in the House of Commons at 3:46 pm on 15th July 1991.

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'.—(1) In section 732 of the Taxes Act 1988, after subsection (2)(exemption for market makers) there shall be inserted—

"(2A) Subsection (1) above shall not apply in prescribed circumstances if—

  1. (a) the first buyer is—
    1. (i) a prescribed recognised clearing house, or
    2. (ii) a member, of a prescribed class or description, of a prescribed recognised investment exchange, and
  2. (b) the subsequent sale is carried out by the first buyer after a prescribed date and in the ordinary course of his business."

(2) At the end of that section there shall be added— (7) For the purposes of subsection (2A) above—prescribed" means prescribed in regulations made by the Treasury;recognised clearing house" means a recognised clearing house within the meaning of the Financial Services Act 1986;recognised investment exchange" means a recognised investment exchange within the meaning of that Act.".'.— [Mr. Maude.]

Brought up, and read the First time.

Photo of Francis Maude Francis Maude The Financial Secretary to the Treasury

I beg to move, That the clause be read a Second time.

The new clause addresses the issue of representations from the exchanges that we have just discussed. It has been put to us that the exemption for market makers under section 732(2), covering bond washing, will be too limited in the context of the operations of the new merged market.

The substantive point, of whether an extension should be made to the exemption for market makers to include London derivatives exchange dealers, is still under review. The new clause simply provides the enabling power for regulations to extend the exemption. That has to be done in this year's Finance Bill because it is intended that the LDE will be operational by the end of the year. The case for making the substantive change has yet to be made and considered. The taking of the powers does not imply a Government view at this stage on the desirability of extending the exemption. Parliament will have an opportunity in the normal way to scrutinise any regulations implementing any substantive change that we seek to make.

Question put and agreed to.

Clause read a Second time, and added to the Bill