SECURITIES and Futures Commission (SFC) chairman Anthony Neoh says he can foresee negotiated commissions on stock transactions in Hong Kong. Local brokerages have bitterly opposed them despite pressure from the Financial Secretary. Mr Neoh said he hoped for a compromise between small brokerages which preferred not to compete for retail business on commission costs - now fixed at 0.25 per cent - and Financial Secretary Sir Hamish Macleod who has ruled out a cut in the 0.3 per cent share deal stamp duty unless commissions fell. 'I believe the fixed commission on high-value transactions may well go,' he said at last night's release of the commission's sixth annual report. 'For the small value transactions then maybe there is a case for retaining the present system. 'As to how 'large transaction' is defined, the amount is very intangible.' Allowing big brokerages to negotiate fees with major institutional clients would be regarded as a major step forward by fund managers and investment professionals but the use of commission rebates or soft dollar deals to funds from brokerages is sometimes tantamount to negotiating commission. The SFC report said 1994 was a slack year in the markets and the regulator's income dropped steeply. In the year to March 31, 1995, the SFC took levies from the stock and futures exchanges of $140.11 million after reaping $341 million in 1993-94. While exchange turnover in January 1994 reached $220 billion, it never reached even $100 billion in the SFC's 1994-95 fiscal year. In December 1994 and January 1995 it was only about $60 billion, according to tables in the report. It said 1994 was a busy year with enforcement actions up by 17.5 per cent. Between March 31, 1994, and the same date this year, the SFC's enforcement division handled 369 cases compared with 314 in 1993-94. A total of 191 of the investigations had been completed compared with 162 in 1993-94. He said the most significant cases handled had been the completion of two insider dealing inquiries by the Insider Dealing Tribunal, a petition to the Supreme Court to wind up listed MKI Corporation, revocations and suspensions of licences and public reprimands. In 1994 the SFC took on some of Hong Kong's biggest institutions. It hammered Standard Chartered Securities and merchant bank Standard Chartered Asia for fixing floats, trading malpractices and misleading regulators. With United States-based brokerage Smith Barney, it was hit for operating without a properly registered dealing director. A series of rat-trading nests were also cleaned out, starting with some dealers at Standard Chartered Securities. A major blow was struck when a dealer at Great Honest Investment was suspended for six months. He had been found to have helped eight floor traders to rat-trade and short-sell. The division received 1,445 complaints during the year and full investigations were made in 12 cases. Enforcement director Michael Wu said: 'I don't think the extra number of actions means the market has gone bad or that there are more transgressions. We have got more efficient.' Mr Neoh said more audit staff had been freed from developing systems to handle more routine investigations. About eight per cent of stock exchange securities dealers were audited and 21 per cent of non-exchange member dealers were inspected. About eight per cent of futures exchange members were inspected and 29 per cent of non-member futures dealers checked. A total of 24 per cent of investment advisers were checked and 22 per cent of commodity trading advisers.