45.

In the 1998 Budget, I announced a concessionary 10 per cent tax rate on income derived by financial institutions from trading in bonds. For the bond market to flourish, it is important to develop a swap market to provide market players with avenues for risk-hedging and arbitraging. To encourage the development of the swap market here, the concessionary 10 per cent tax rate will be extended to income derived by financial institutions from trading in interest rate and currency swaps. This concession will take effect from Year of Assessment 2001 and will apply until 27 February 2003, which is also the expiry date of the 5-year bond incentives which took effect on 28 February 1998.