The Securities and Futures Commission's (SFC) budget deficit is to widen to $131 million for the financial year to March next year and its reserves are expected to fall more than 50 per cent to $412 million. According to a paper submitted to legislators, the SFC is forecasting a deficit of $131 million for the year compared with $122 million for the year to March this year. Despite running a deficit budget for two years, the commission will not apply for funding from the Government but will use its own reserves to cover the shortfall. This will be the seventh consecutive year the commission has decided not to request funding from the Government. The SFC considered increasing the transaction levy and other fees and charges to cover the deficit but rejected the idea as a result of the current economic downturn, it said. Funding the deficit will cause the regulator's reserves to fall from $843 million to $712 million by the end of March next year. Including a $300 million contribution to the stock exchange compensation fund for failed brokers' clients, its reserves will drop to $412 million - equal to about 11 month's operating expenditure. The SFC also revised its estimated budget deficit for the year to March this year from $44 million to $121 million, owing to lower than expected stock market turnover. It revised down its income 22 per cent for the year to March to $297 million from $386 million. The transaction levy collected on stock and futures transactions is the commission's major source of income. Daily stock market turnover for the six months from April to September last year was only $6.3 billion. Estimated expenditure for the year to the end of March was revised down from $413 million to $403 million after a general decrease of costs, in particular personnel expenses. The commission expects revenue for the year to March next year of $309 million, up 11.89 per cent over the year to March this year.