Securities & Futures Commission Chief Operating Officer Peter Au-Yang expects a 19.6% drop in the body's revenue for 2006-07 as the levy rate reduction will be implemented later this year.

Explaining the commission's revised estimates for 2005-06 and the proposed estimates for 2006-07 at the Legislative Council today, Mr Au-yang said the estimated revenue for 2006-07 is $587.2 million.

The total estimated operating expenditure for 2006-07 is $561.9 million, 10.3% higher than the revised 2005-06 revised estimates.

Since, the commission has projected a surplus in its 2006-07 budget even after a 20% reduction in its levy income, it will not seek an appropriation from the Legislative Council.

Better than expected

Mr Au-yang said the financial year 2005-06 has been a very good year in terms of market activities.

"When we prepared the revised estimates, the average daily turnover for the first seven months of the year to October 31 was about $19.9 billion, over 50% higher than that assumed in the approved estimates while trading in the futures market was about 29% more active than expected.

"Higher number of licensing applications and more corporate activities will continue to bring in more fees and charges income. On these bases, we expect our revenue to increase by 42.4% from $512.9 million to $730.2 million."

The revised estimated operating expenditure for the year is $485.9 million, which is slightly above the approved estimates by $4.2 million.

"In 2006-07, we shall continue to tightly control all our expenditure. However, if required, additional resources will be allocated to areas which are considered necessary to improve the quality of our market or to enhance Hong Kong's status as a preferred fund raising centre in the region," he said.