Schedule 21 introduces changes that will remove obstacles to competition and expand choice in the trading of financial instruments in the UK. They change the stamp duty and stamp duty reserve tax reliefs so that institutions in the City of London can take advantage of the liberalisation of market structures being introduced across Europe by the markets in financial instruments directive, or MIFID.
The rules on intermediary relief are being changed so that, from 1 November, it will no longer be necessary to report and exchange transactions in shares that are admitted to trading on a regulated market such as the main market of the London stock exchange. That will allow providers of transaction reporting services to enter the market more easily. In February, we announced our intention to extend that approach to include shares that are admitted to trading on multilateral trading facilities such as the AIM that are operated by the London stock exchange and other similar markets. Before proceeding, however, we are allowing the Financial Services Authority time to consider fully any regulatory implications. We will provide an update on progress at the time of the pre-Budget report.
The rules on intermediary relief are also being changed to allow persons who provide an over-the-counter service and who are not exchange members to apply directly to HMRC for approval as intermediaries.
Our amendments will remove an unnecessary condition from the stamp duty and stamp duty reserve tax intermediary reliefs. From 1 November, intermediaries will be able to benefit from MIFID, the new regulatory regime. As MIFID contains provisions for making public transactions in shares that are admitted to trading on regulated markets, we have decided that it is no longer necessary for such provisions to be a condition for intermediary relief. The amendments remove the requirement to make public transactions in regulated market shares for shares that are admitted to trading only on a multilateral trading facility. Transactions will still qualify for relief only if reported to the market, so the changes are consistent with the written ministerial statement of 20 February.
We are also taking the opportunity to make a technical amendment to the definition of a European economic area state to ensure that it has the same meaning as the definition in the InterpretationAct 1978.
In contrast to what I said about the last two clauses, I welcome the schedule. It is important that the reliefs available for intermediaries at the London stock exchange be extended throughout the variety of platforms that will open as a result of MIFID. Access to exchanges from other countries in Europe will also be opened up. The Treasury has worked constructively with industry players such as the London Investment Banking Association to get this complicated set of changes into reasonable shape. I understand that there are a few glitches, but I hope that they are of the sort that can be resolved satisfactorily using guidance.
Having spent two years of my life on MIFID, I am pleased that the Government are pressing ahead with implementation. Giving birth to MIFID was a long and painful labour. However, I had the pleasure of working hand in hand with the Treasury on many aspects of the negotiations. I am not sure that what we produced was necessarily a great result, but I hope that it might be of significant benefit in the future, both to consumers, by ensuring lower costs with savings and investments, and to the City of London, by opening access to markets across the European Union.
I pay tribute to the Government for transposing MIFID on time. Sadly, the rest of Europe has chosen not to do the same. It is a concern that, although market participants who are preparing to implement MIFID might comply with UK legislation because it will have been transposed, they will have to deal with multiple systems across the rest of Europe because our European partners have been somewhat slower to implement.
Amendments made: No. 194, in schedule 21,page 239, line 16, leave out from ‘Commissioners’ to end of line 18.
No. 195, in schedule 21, page 239, line 33, at end insert ‘and’.
No. 196, in schedule 21, page 239, leave out lines 35 to 37.
No. 197, in schedule 21, page 240, line 12, at end insert ‘and’.
No. 198, in schedule 21, page 240, leave out lines 14 to 16.
No. 199, in schedule 21, page 240, line 45, at end insert ‘and’.
No. 200, in schedule 21, page 240, leave out lines 47 to 49.
No. 201, in schedule 21, page 241, line 43, after second ‘time’ insert
‘is a member State or any other State which at that time’.
No. 202, in schedule 21, page 242, line 18, at end insert ‘and’.
No. 203, in schedule 21, page 242, line 22, leave out from ‘(“the Commissioners”)’ to end of line 24.
No. 204, in schedule 21, page 242, line 37, at end insert ‘and’.
No. 205, in schedule 21, page 242, line 39, leave out from ‘market’ to end of line 41.
No. 206, in schedule 21, page 243, line 11, at end insert ‘and’.
No. 207, in schedule 21, page 243, line 13, leave out from ‘market’ to end of line 15.
No. 208, in schedule 21, page 243, line 42, at end insert ‘and’.
No. 209, in schedule 21, page 243, line 44, leave out from ‘market’ to end of line 46.
No. 210, in schedule 21, page 244, line 41, after second ‘time’ insert
‘is a member State or any other State which at that time’.—[Mr. Timms.]