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.