Hong Kong Exchanges and Clearing Limited (HKEx) welcomes the government's proposal to reduce stamp duty and believes it will increase the competitiveness of the Hong Kong securities market.

In his budget speech, the Financial Secretary proposed that the ad valorem stamp duty which is levied on each share transaction will be reduced from 0.1125 per cent to 0.1 per cent of the transaction value, payable by both the buyer and seller.

The Financial Secretary also proposed that an addition to the transaction levy, of 0.002 per cent of the transaction value, be introduced as contribution to an investor compensation fund to be established by the Securities and Futures Commission (SFC). The portion of the transaction levy currently shared by SFC and the Stock Exchange of Hong Kong, a wholly-owned subsidiary of HKEx, of 0.01 per cent of the value of each transaction, will remain unchanged.

HKEx supports the government's proposals and believes that a new investor compensation arrangement will strengthen investor protection. HKEx will make a submission to SFC in response to the regulator's consultation paper on the investor compensation fund issued today.