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Derivatives Clearing Diverts Capital from Long-Term Investing – PensionsEurope

By Jonathan Williams
June 24, 2015, IPE

Mandating central clearing of derivatives trades would only serve to increase profits for clearinghouses and could increase risk, PensionsEurope has warned. 

In a discussion paper on the Capital Markets Union (CMU), published to coincide with the industry group’s annual conference in Brussels, the association warned that a more coherent capital market could be undermined by regulatory requirements diverting funds away from investment opportunities.

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E.U. Seeks Transaction Tax as 11 States Meet in Bid to Choose Path

By Rebecca Christie
June 17, 2015, Bloomberg Business

The 11 European nations seeking a financial-transactions tax will meet Thursday in Luxembourg in a bid to decide how to design the measure, according to European Union officials.

Participating states are wrangling over which trades to tax and who should collect revenue, according to planning documents obtained by Bloomberg News. Finance ministers and deputies are next slated to meet in Luxembourg with EU Economic and Tax Commissioner Pierre Moscovici before scheduled meetings of all 19 euro-area finance ministers

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Financial Transaction Tax: a Restless Pursuit?

May 8, 2015, The Trade

Many thought the dreaded European Financial Transaction Tax (FTT) had gone away, but in January, French and Austrian finance ministers wrote a letter to counterparts in the 11 supporting countries (ECP 11)— Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovenia, Slovakia and Spain—suggesting a revival of the tax, with a proposed arrangement date of January 2016.

Following that initial flurry, things have since quietened down, but, across Europe, opinions differ as to whether the tax will ever come in at all.

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Eleven EU Countries Close In On Tax Compromise

By Gabriele Steinhauser
November 7, 2014, The Wall Street Journal

Eleven European Union countries that have pledged to impose a tax on financial transactions have moved closer to finding a compromise on the levy, finance ministers said Friday, although revenues will lie far below initial estimates.

“We have agreed on the scope of taxation, which looks at shares first and then looks at taxation of some derivatives,” said Italian Finance Minister Pier Carlo Padoan, who led Friday’s debate. “On this last point, discussion is still ongoing, but I am confident progress will be made.”

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Central Collection Box Proposed for FTT

By Tim Cave and Anish Puaar
Published August 7, 2014 Financial News

The proposed European financial transaction tax may be collected through a central industry utility, raising the possibility of using existing market infrastructure such as trade repositories to gather the levy.

The creation of a “dedicated tax collection utility” is one of four options listed in a European Commission document on the FTT’s “collection methods and data requirements”.

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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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