The Securities and Futures Commission (SFC) is facing pressure to cut its investment transaction levy and licence fees after lawmakers took the unprecedented step of rejecting its budget proposal.
They slammed the watchdog as being 'too rich' to need to charge fees when it was sitting on billions of dollars in reserves.
Besides voting to reject the budget, the majority of the Legislative Council's financial affairs panel yesterday called on the SFC to submit a new budget to address what they described as 'unacceptably high' reserves.
The reserves currently stand at HK$7.4 billion and are expected to rise to HK$7.6 billion by the end of March 2013.
'Under the law, the government and the SFC have agreed that whenever SFC reserves reach a level equivalent to two years' of its expenses, it should suspend or reduce the transaction levy,' said Chim Pui-chung, lawmaker for the financial services sector. 'The SFC reserve is currently equivalent to seven years of its annual spending, but its budget doesn't mention cutting its levy or other charges.'
The current reserves are 7.3 times the SFC's HK$1.01 billion budget for the current fiscal year which ends in March. They could support the SFC's expenditures for 5.4 years, based on its estimated HK$1.36 billion budget for the new financial year which starts on April 1.