US FTT returns to agenda, says Fidessa US specialist

Mikhail Merone, product marketing specialist at trading systems supplier Fidessa’s New York office, says a US version of Europe’s Financial Transaction Tax is once again being pursued through the US Senate and Congress.

Merone said in his latest blog that while much of the US trading community has been focused on European regulations impacting on US companies, the issue of a domestic financial transaction tax (FTT) has been put back on the agenda by senator Tom Harkin and Congressman Peter DeFazio – two legislators who unsuccessfully proposed similar legislation in 2009 and again in 2011.

This time they may be more successful, Merone warns. Those proposing the tax say it could raise $352bn over 10 years by applying a 3bps tax on every trade. And they have learned to pitch the proposed law in a way suggesting it will not harm “small business or the middle class and Wall Street can certainly afford it”.

Merone said the tax as proposed could particularly affect proprietary and high frequency traders.

This fits in with the language being used to describe the tax as one that would target “speculators”. But, Merone notes that, for example, the SEC itself has not yet determined whether high frequency trading damages the market or helps it by providing additional liquidity. Thus statements as to the harm done by high frequency traders may therefore be premature.

The proponents of the new law may fail again in their attempts as previously, Merone said, but adds that “stranger things have happened”.



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