While brokerages and banks have laid off thousands of staff amid financial belt-tightening, the industry regulator has the opposite problem. The Securities and Futures Commission has been attacked by lawmakers for being 'too rich' and having an unnecessarily bloated reserve. In fact, if nothing is done to revamp its income structure, the SFC is likely to continue to be the richest regulator in the world. First take a look at how rich it is - the SFC has a cash reserve of HK$7.4 billion, which is expected to rise to HK$7.6 billion next year. Lawmakers have urged it to cut or waive the 0.003 per cent transaction levy charged on investors when they trade stocks. Legally, it is required to consider a levy cut when its reserve can support two years of operation. Currently, its reserve could be used for seven years of operating expenses. Insiders have told White Collar that the SFC wants to keep the money to buy its own office, probably the redeveloped government west wing. The SFC board last week refused to reduce the levy but did agree to waive licence fees for brokers for two years. White Collar agrees that buying its own office is a good way for the SFC to save rental payments over the long term. The commission this year is paying more than HK$200 million in rent for its office space. But even if it pays up to about HK$2 billion to buy its own office, its 'rich'' problem remains. If the SFC owns its own office, it can save HK$200 million in rental expenses a year, which is more than 10 per cent of its annual expenditure. So after buying an office, it will spend less and more money will go into its reserves. Again, the rich get richer. The key revenue source that led the SFC to become a rich regulator is the levy income paid by investors on each stock transaction. When the SFC was established in 1989, the average daily turnover was HK$1.22 billion. Ten years later, in 1999, the turnover increased to HK$7.76 billion. Last year, the average daily turnover was HK$69.73 billion - 57 times the turnover of 1989. This explains why even though the levy has been reduced from 0.005 per cent to 0.003 per cent in recent years, the SFC is still flush with money. The simple fact is the market is much bigger. When the SFC was established, there were only 298 listed companies compared with more than 1,400 companies now. If the SFC continues to tap funds from the market through the levy, it is likely to continue to heap up money in its huge reserve again. Instead of worrying so much about money, the SFC should focus on cracking down on insider dealings and market manipulation. The time is right therefore to review the whole income structure of the SFC. We need an efficient regulator, not a rich one.