News

E.U. Financial Transaction Tax Progress Stalls

By Jim Brunsden
June 5, 2016, Financial Times

Europe’s faltering bid to introduce a financial transaction tax has suffered a further blow as officials acknowledged that little headway has been made in the last six months despite finance ministers in December setting a June deadline for a deal.

Work on the tax, known as an FTT, has been teetering on the brink since Estonia late last year pulled out of the club of 11 countries that had committed to apply it.

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Comment: The Overselling of Financial Transaction Taxes

By Kenneth Rogoff
June 6, 2016, Project Syndicate

However November’s presidential election in the United States turns out, one proposal that will likely live on is the introduction of a financial transaction tax (FTT). While by no means a crazy idea, an FTT is hardly the panacea that its hard-left advocates hold it out to be. It is certainly a poor substitute for deeper tax reform aimed at making the system simpler, more transparent, and more progressive.

As American society ages and domestic inequality worsens, and assuming that interest rates on the national debt eventually rise, taxes will need to go up, urgently on the wealthy but some day on the middle class. There is no magic wand, and the politically expedient idea of a “Robin Hood” tax on trading is being badly oversold.

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E.U. Transaction-Tax Plan on Brink as Belgium Inches Toward Exit

By Ian Wishart
May 5, 2016, Bloomberg

Belgium’s finance minister signaled his country may pull out of plans by a group of European Union nations to impose a financial-transaction tax, a step that would leave the initiative hanging by a thread.

Johan Van Overtveldt said he is opposed to the levy and is winning the argument within the four-party coalition government to withdraw from negotiations over fears that the tax would drive business away.

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Comment: Brexit Good for U.K. FinTech

By Chris Gledhill
May 3, 2016, Finextra

Behind closed doors in a small office, off an nondescript corridor, in a rather large building on Rue Wiertz in Brussels, Belgium a hushed conversation took place last month. Shortly afterwards a piece of European Parliament legislation was quietly shelved. It carried the rather dull title of "Directive 2009/125/EC" and it was one of the most dangerous documents in Europe!

What was so dangerous about Directive 2009/125/EC, or to give it its full title, "Establishing a framework for the setting of ecodesign requirements for energy-related products"? Directive 2009/125/EC was planning to ban high-powered kettles across Europe to reduce carbon emissions. At the last minute the rulers in Europe realised that banning high powered kettles from the British, the world's greatest tea drinkers, would cause a literal storm in a tea cup. Not helpful at a time when the U.K. people are about to vote on whether to leave the European Union!

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Transaction Tax Poses Bigger Threat Than `Brexit' to Traders

By David De Jong
April 8, 2016, 
Bloomberg

There is a bigger threat to financial markets than Brexit.

Ten European countries are developing a tax on financial transactions, a prospect so terrifying to the continent’s traders that one firm in the Netherlands has already drawn up contingency plans to move to the U.K. or Switzerland.

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Wall Street Pushes Back on Trading Tax

By Naomi Jagoda
March 23, 2016, The Hill

Wall Street is mobilizing against proposals to tax financial transactions as the idea gains attention on the campaign trail and in Congress.

The idea already has one high-profile supporter, Democratic presidential candidate Bernie Sanders, who has proposed legislation in the Senate for a tax on the trade of stocks and other securities.

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FTT on the Back Burner Again

March 10, 2016, Automated Trader

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How Bernie Sanders Wants to Tax Your Trades

By Emily Stewart
February 21, 2016, TheStreet

"Yes, I do believe that now after the American people bailed Wall Street out, yes, they should pay a Wall Street speculation tax so that we can make public colleges and universities tuition-free," said Vermont Senator Bernie Sanders at the sixth Democratic presidential debate in Milwaukee. But what exactly does such a tax entail?

One of the core parts of the Sanders campaign platform, the Wall Street speculation tax otherwise known as a "financial transaction tax" – aims  to raise billions of dollars in revenue by placing a small levy on every stock, bond and derivative bought and sold in the United States. He says such a measure would cover the entirety of his $75-billion-a-year plan to make free college a reality in America.

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Schelling Sees March Reckoning for E.U. Push on Transaction Tax

By Mark Barton, Rainer Buergin, and Rebecca Christie
February 11, 2016, Bloomberg Business

Austrian Finance Minister Hans Joerg Schelling said European efforts to agree on a common financial-transaction tax may fall apart if not enough nations are willing to move forward by next month.

At least nine countries must be on board for the tax plan to proceed under E.U. rules for “enhanced cooperation” when efforts among all 28 nations fail. The tax had as many as 11 backers, but is now at risk of falling to just eight, Schelling said in an interview in Brussels.

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Belgian Support Shrinking for Eurozone Transactions Tax

By Braden Campbell
January 25, 2016, Law360

Support for a proposed financial transactions tax in several eurozone nations is continuing to shrink, as Belgium’s finance leader on Saturday expressed displeasure with the current incarnation of the plan to the national news agency there.

European media reported over the weekend that Belgian Finance Minister Johan Van Overtveldt said that although Belgium does not have immediate plans to back out of the negotiations, current plans are “unacceptable,” imperiling a controversial proposal already more than four years in the making.

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FTT Slips Off E.U. Agenda

By James Rundle
January 14, 2016, Financial News

The financial transaction tax is notable by its absence from the topics due for political agreement under the leadership of the new Dutch six-month presidency of the European Council.

The lack of an agreement meeting for the controversial levy comes despite participating countries saying they wished to introduce the tax by June 2016.

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Leaving Europe Outweighs MiFID on Risk Scale

By Tim Cave
January 6, 2016, Financial News

With a year-long delay to the European Union’s revised trading rulebook now looking likely, and many implementation projects on ice, thoughts are turning to another issue looming over Europe: Brexit. A referendum on whether the U.K. should remain in the E.U. is set take place before the end of 2017 but many think the sooner it takes place, the better.

A vote to exit would leave London-based practitioners wondering not when MiFID will be introduced, but whether it will be at all.

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Ten E.U. Countries Agree on Some Aspects of Financial Transactions Tax

By Victoria Dendrinou
December 8, 2015, The Wall Street Journal

Ten European Union countries that have pledged to impose a tax on financial transactions on Tuesday reached a compromise on some aspects of the levy, and gave themselves another six months to agree on the remaining key issues, including the rate of the tax and the use of its proceeds.

Finance ministers representing 11 E.U. countries had aimed to strike a deal by the end of this year on the basic form of a tax on financial transactions, after missing a previous official deadline of the end of 2014. But the tentative agreement reached Tuesday falls short of a full political deal and doesn’t address several major aspects of the tax, underlining the political differences countries face on the remaining issues.

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E.U. Transaction Tax Falters as Austria-Imposed Deadline Nears

By Rebecca Christie
November 25, 2015, Bloomberg Business

A proposed European financial-transactions tax is foundering as 11 participating nations try to meet a December deadline to decide how to charge levies on an array of financial products.

Nations still haven’t decided what trades to tax, how to calculate levies or how to treat pension funds and government bond-related transactions, according to a document prepared for technical talks Wednesday in Brussels. The slate of unsettled topics suggests nations will have trouble meeting the December deadline set earlier this month by Austrian Finance Minister Hans Joerg Schelling, who leads the negotiations.

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Italy, Other States, Raise Objections on Financial Transaction Tax

By Francesco Guarascio
November 10, 2015, Reuters

Italy and other European states have expressed reservations on the scope of a common financial transactions tax (FTT) although some progress has been made on narrowing differences, Italy's finance minister said on Tuesday.

Germany and France proposed the FTT in 2012, with the euro zone debt crisis raging, as a way of correcting excesses in the financial sector that was blamed for the worst market turmoil and decline for decades. It has been debated ever since.

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E.U. FTT Could Defeat Objectives of CSDR, Claims Lobby Group

September 30, 2015, The Trade

The E.U.’s proposed Financial Transactions Tax (FTT) could reduce the supply of securities available to market participants to borrow to cure settlement fails, according to the International Securities Lending Association (ISLA).

This, says the association, will increase operational risk in the system and could therefore defeat one of the main objectives of the Central Securities Depository Regulation (CSDR).

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Berlin to Push for Financial Transaction Tax to Cover All of E.U.

By Jim Brunsden and Peter Spiegel
September 13, 2015, Financial Times

German Finance Minister Wolfgang Schäuble will push for a planned European tax on stock and bond trading to apply in all E.U. countries in spite of firm UK opposition to the scheme and warnings from banks it would hurt their business.

While only 11 nations — including Germany and France — are planning to participate in the financial transactions tax, Mr Schäuble said on Saturday that this should be seen only as a first stage, and that efforts should then be made to convince other nations to join.

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Comment: Why Taxing Wall Street Won't Work

By Bill Harts
August 4, 2015, CNBC

The goal is lofty, audacious and of perfect sound-bite length: Free college tuition for all, paid for exclusively by a "small" tax on "Wall Street speculators." 

The idea of a financial-transaction tax has been kicking around for a while but has gotten more notice since presidential candidates Bernie Sanders and Martin O'Malley have been calling for it. Sanders is calling for a 0.5-percent tax on stock trades, a 0.1-percent tax on bond traders and a smaller tax on derivatives (futures and options) trades.

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GFMA, IIF, ISDA Plan Liquidity Lobbying Push

By Duncan Wood
July 10, 2015, Risk

Draft report urges regulators to consider impact of Fundamental review of the trading book and financial transaction taxes on markets. 

Three industry associations are preparing a major new lobbying offensive on the topic of market liquidity, based on research and analysis conducted by consulting firm PwC.

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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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