Small brokers have expressed alarm about possible fallout from any moves by the stock exchange to trade off a cut in minimum commission rates for a cut in Government stamp duty on share deals. Some, such as exchange council member Syed Bokhary, accused the Government and regulatory representatives of harbouring a secret agenda to eliminate smaller broking firms, particularly sole traders. Recent international moves to cut benchmark stamp duty rates have put heavy pressure on Hong Kong to retain its edge on transaction costs for share trading. The Government has made it clear any stamp duty reductions must be accompanied by a corresponding fall in brokers' commissions. A move in Britain two weeks ago for tax relief on share deals for firms acting as agents for other market participants has intensified pressure on the local exchange. It is understood the exchange is again considering a reduction in the current minimum 0.25 per cent commission rate to bring about a fall in stamp duty. Mr Bokhary - a small broker representative on the exchange council - said moves to trade off reduced stamp duty and lower commission could be aimed at eliminating smaller broking firms. He had 'strong suspicions' that there could be a 'hidden agenda to eliminate small broking firms' in the wake of a string of closures that plagued sole traders and other small operations recently. Cuts in commissions were likely to lead to a price war which was unlikely to attract more volumes, particularly to smaller brokers, he said. Business could be taken from smaller firms by larger firms able to negotiate bulk deals at lower rates. He said some larger brokers may be supporting the moves to lower commissions in exchange for lower stamp duty because they already were providing 'soft' commissions to clients. This was giving them perks that indirectly pushed brokerage rates down. He said it was 'inevitable' the Government would be forced to cut stamp duty ultimately, because international reductions in the area meant Hong Kong no longer had lower rates than other countries. 'But how does slashing commissions benefit the government?' he asked. 'Hong Kong's brokerage rates already are the lowest in the world.' The managing director of broking firm United Mok Ying Kie, Richard Witts, said cuts in stamp duty on share trading were inevitable, but making them subject to commission cuts was harsh on many brokers. 'I've never heard of a client begrudging a broker a quarter of a per cent,' he said. Mr Witts said moves towards a trade-off 'do not make sense at all'.