At a time when the financial transaction tax – or “Tobin Tax” – is facing a veto from the UK in the European Union, Dan Barnes assesses the impact that a Europe-only tax could have on the exchanges operating in the region, and therefore their competitiveness in the global playground.
This legislation came about with the intent of curbing risky behaviour in the markets, and aiming to decrease market volatility, which effectively appears to penalise high frequency trading.
The lead opinion comes from Fred Ponzo, Managing Partner, GreySpark, who highlights that taxing the amount of transactions placed, as opposed to deed of ownership, will only lead to those extra costs incurred being passed on directly to the client.
As a result, this will cause a slowdown in order flow and therefore hit the bottom line of the exchanges, multilateral trading facilities (MFTs) and dark pools.
Alternative solutions such as the introduction of a stamp duty are gaining traction, and the article continues to analyse previous schemes which aim to rein in risky activity and calm the markets.