The Government is being urged to scrap the 0.25 per cent stamp duty on stock-market transactions in next week's Budget in a bid to increase the local market's competitiveness. The legislator representing the financial services constituency, Fung Chi-kin, said the move was necessary during the current poor market sentiment. 'The scrapping of stamp duty would help cut down transaction costs,' he said. 'It would also be in line with international practices. 'Some advanced markets such as London do not collect any stamp duty for share transactions.' In last year's Budget the government cut stamp duty from 0.3 per cent for each stock transaction to 0.25 per cent. For the year to the end of June last year, the Government received $9 billion from the stamp duty. Mr Fung said he supported any proposals the Budget might make to reform the stock and futures markets in order to close regulatory loopholes, but he opposed any plans to merge the two exchanges or set up a single super-regulator. It is understood the 1999 Budget - to be announced next Wednesday - will include a wide range of measures to reform financial markets in an attempt to defend the dollar peg and increase market competitiveness. Speculation has suggested the Budget may propose studying the merger of the stock and futures exchanges - a move recently adopted by Singapore. Former stock exchange chairman Edgar Cheng Wai-kin raised such an idea two years ago. 'Singapore had its own reason to merge its stock and futures exchanges,' Mr Fung said. 'I think the SAR Government should seriously consider the pros and cons of such a move rather than following other markets' moves. 'The stock and futures exchanges are doing completely different types of business, carrying different risk portfolios. 'I wonder whether there will be any real benefit in merging the two.' He said the real need was to increase co-ordination among regulators. 'The double play of the currency speculators in the local money and futures markets highlighted a need for more co-operation between the Hong Kong Monetary Authority and the Securities and Futures Commission,' he said. He rejected the idea of setting up a super-regulator to monitor all markets because the move would be very costly. But he said he hoped the Budget would contain long-awaited proposals to merge the three clearing houses for shares, futures, and stock options. Such a merger would cut costs and improve risk management, he said.