Global exchanges ramp up pressure against FTT

Michael Bow
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TOP stock exchange leaders yesterday added their voice to the growing global backlash against plans hatched by a small band of EU states to tax financial transactions.

The Financial Transaction Tax (FTT), which has been provisionally agreed by 11 EU countries, will tax transactions made between financial institutions from 2014 onwards, even if the institution is not in one of the 11 countries to back the plan.

Yesterday, executives from top stock exchanges around the world warned the plan would be harmful for European markets, leading to an exodus of capital to other regions.

Chief executive of Bats Chi-X Europe, a European-wide stock exchange, Mark Hemsley said the plans could provoke economic tensions between competing financial jurisdictions.

“The financial transaction tax will be extremely harmful for Europe, especially if it stretches into extra-territoriality and becomes the next trade war, as it were,” he said.

The calls, made at roundtable debate at the City Week forum in London yesterday, were echoed by a managing director of the Tokyo stock Exchange, Tomoyoshi Uranishi, who warned that, “most of the trading weight will shift from Europe to Asia and America.”

City institutions have already voiced strong criticism of the FTT plan – which European officials, including EU tax commissioner Algirdas Semeta, pictured – hope will raise €35bn a year in revenues.

A report on Monday from investor group ICI Global warned US money market funds alone could be hit by $35bn (£22.9bn) every year, if the plan is agreed.

The Investment Management Association, a fund trade group, also said on Monday the FTT would also tax on investors and pension savers.

Last night, the powerful Institute of International Financial, based in Washington, issued a statement saying the impact on market liquidity could be “severe” and would fail to meet its goals.

“Any revenue it would generate would be considerably outweighed by the potential costs in terms of burden on end-users of financial services, potentially weaker economic growth and job losses,” its Council on Asset and Investment Management said last night.

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