The securities watchdog has proposed cutting licence fees for brokers and fund managers in a bid to help them cope with the economic downturn. In a consultation paper released yesterday, the Securities and Futures Commission (SFC) proposed a 3 per cent cut in annual fees for all SFC-regulated individuals and companies. It also proposed an additional 5 per cent cut as an incentive to register with a new licence system at an early stage. The cuts will further erode income for the SFC, which has predicted it will see a HK$118 million deficit for the financial year to March next year. A deficit of HK$88 million is expected for the year. SFC executive director Alexa Lam said: 'The SFC is doing its part to help trim the compliance costs of intermediaries in view of the difficult economic environment. 'The full economic benefits will be felt when intermediaries also make an effort to streamline their businesses and reduce the number of licensed entities.' Annual fees paid to the SFC range from HK$200 - usually for individual staff of a brokerage house, to HK$129,730 - for a licence to operate a brokerage. An 8 per cent reduction would save intermediaries between HK$16 and HK$10,378.4 a year. The cuts will coincide with the introduction of the new licence system which will come into effect after the enactment of the Securities and Futures Bill to be voted on next week. The new system allows brokers to apply for a single licence to operate different businesses. Under the existing system, brokers carrying out different types of stock and futures businesses must have different licences. The SFC will allow a two-year transition period to switch to the new system. The fee cut proposal includes a 5 per cent discount to those who apply for the new system in the first year. Fees have not been changed since 1993, while the Consumer Price Index has risen 28.3 per cent since then, the SFC says. Licensing fee revenue contributes 68 per cent of income used to fund the SFC's licensing and supervision work. The consultation period on the fee proposal ends on April 8.