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Facing Up to the Financial Transaction Tax

By Elliott Holley
Published July 22, 2014 Banking Technology

A European financial transaction tax on equities and derivatives trades could be damaging for European liquidity levels and the City of London, but  it also looks set to impose serious operational challenges for banks, brokers and their buy-side clients following the failure of a UK appeal to the European Court of Justice earlier this year.

“Based on what we know of the FTT so far, there is a strong risk that this will hurt the market,” said Christian Voigt, business solutions architect at Fidessa. “The tax will impact those who trade a lot, such as liquidity providers. Market makers are needed to provide liquidity to the market in times of stress – but the FTT will discourage them from doing so at the very moment when the market needs liquidity the most.”

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Deutsche Boerse Looks Outside Euro Zone as Transaction Tax Looms

By Andres Kroener, Edward Taylor, Jonathan Gould, and Douwe Miedema
Published June 30, 2014 Reuters

Deutsche Boerse plans to expand operations outside the euro area to give non-European clients an opportunity to avoid the bloc's proposed financial transaction tax, four people familiar with the exchange operator's thinking told Reuters.

"The group has to be ready to offer its clients something outside the euro zone if domestic trading is no longer attractive because of the financial transaction tax," one of the sources said.

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EU Should Be Transparent in FTT Talks, Italian Official Says

By Rebecca Christie
Published June 3, 2014 Bloomberg

Proposed European financial-transaction tax shows need to coordinate work on policies that affect nations differently, such as those inside and outside the euro area, says Stefano Sannino, Italy’s representative to the EU. “We need to be transparent in the way we manage these kinds of files,” Sannino says at Brussels event 

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The EU Financial Transaction Tax Will Hurt the Prudent – Not the Reckless

By Mark Boleat
Published May 12, 2014 City AM

The important debate between the City and 11 EU governments on whether or not to introduce a tax on derivatives and shares continued last week. Both sides have scored victories, but now a more conciliatory tone is emerging, and this should be welcomed. With the European Court of Justice rejecting a pre-emptive challenge to this financial transaction tax (FTT) by the UK government two weeks ago, now is the time to look at the proposal away from the spectre of the financial crisis – and to recognise its underlying flaws.

The City of London Corporation published a report in February that showed the key failing of an FTT: it would cost UK households €4.4bn (£3.6bn) – equivalent to 0.2 per cent of our GDP – by reducing the value of their saving. Previous research also found that the cost of UK government borrowing would rise by almost £4bn. 

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EU Countries Pledge to Tax Share Trades by 2016

By Viktoria Dendrinou
Published May 6, 2014 Wall Street Journal

A group of European Union countries led by France and Germany pledged Tuesday to start taxing the trading of shares and some derivatives by 2016, amid opposition by countries that are worried about the tax's economic impact and its legal grounding.

The group supporting the financial-transactions tax presented its latest political agreement at a meeting of finance ministers, saying the tax should be implemented step by step. It would start with a levy on shares and some derivatives—which haven't yet been specified—by January 2016. Later, the tax could be expanded to trading of other financial products.

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Osborne Says U.K. Won’t Hesitate to Challenge Transaction Tax

By Ian Wishart
Published May 6, 2014 Bloomberg

British Chancellor of the Exchequer George Osborne said the U.K. was entitled to challenge in court the legitimacy of a financial-transaction tax proposed by 11 European Union countries if it has an impact on non-participating European nations.

He spoke during a meeting of EU finance ministers in Brussels today.

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EU Financial Transaction Tax Won't Come Before 2016 - Diplomats

Published May 5, 2014 Reuters

Selected euro zone countries will implement a planned tax on financial transactions in 2016 at the earliest, their finance ministers agreed on Monday according to diplomats, leaving unresolved the much-disputed design of the levy.

Having failed to garner global support, Germany and France have led European efforts to introduce a trading tax, seen by some as a vote winner at a time of public anger over bankers' bonuses and fines on lenders for rigging interest rates.

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U.K. Challenge to EU Transaction-Tax Bid May Have Come Too Soon

By Jim Brunsden
Published April 29, 2014 Bloomberg

A European Union court ruling on the U.K.’s challenge to 11 nations’ negotiations to enact a tax on financial transactions may be only the first skirmish in a prolonged legal battle.

The U.K. lawsuit comes before France, Germany and nine other EU nations have finalized any plans for the tax, meaning any ruling from the European Court of Justice in Luxembourg is unlikely to provide definitive answers.

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Schaeuble Says Derivatives Tax Still on Germany’s EU Agenda

By Brian Parkin
Published March 5, 2014 Bloomberg

German Finance Minister Wolfgang Schaeuble said he hasn’t given up on including derivatives in a proposed European financial-transaction tax.

Germany and 10 other European Union countries are seeking to overcome differences that have held up the levy, which should move forward in steps to include derivatives as well as stocks and bonds, Schaeuble said in Berlin today after talks with Austrian Finance Minister Michael Spindelegger.

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EU Would Accept Watered-Down Transaction Tax - Paper

By Alexandra Hudson
Published December 29, 2013 Reuters UK

The European Union's Taxation Commissioner has said he is prepared to accept a more limited tax on financial transactions, following concerns from some countries that the scope of the original proposal was too wide.

"We would support a compromise with a more limited remit... the only red line for us is that any loopholes which would jeopardise the main principle of the tax be avoided," Algirdas Semeta told German financial newspaper Boersen Zeitung.

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