The Securities & Futures (Reduction of Levy) Order 2006, which provides for a 20% reduction of the levy payable in respect of any trading in securities, futures or options contracts, was gazetted today and will be tabled at the Legislative Council on June 21.

Subject to negative vetting, the order will be effective from December 1.

The Financial Services & the Treasury Bureau said the proposed levy reduction will reduce the transaction cost to be borne by investors and thus be conducive to the development of Hong Kong's securities and futures markets. It is estimated the proposal will reduce the transaction cost to the market by about $88 million a year.

Under the order, the levy payable by a seller or a purchaser in respect of the consideration for a sale and purchase of securities, pilot programme securities, and an exchange traded fund will be reduced from the current rate of 0.005% to 0.004%.

The levy payable in respect of the consideration for a sale and purchase of a futures contract will be reduced from the current amount of $1 to 80 cents, while the levy payable in respect of the consideration for a sale and purchase of a Mini-Hang Seng Index Futures Contract, a Mini-Hang Seng Index Options Contract, a stock futures contract or an option on such a contract will be reduced from 20 cents to 16 cents.