Exchanges warn that a financial transaction tax will drive trading away

(Source: Reuters)

Reuters reports that top exchange officials have intensified their lobbying against a European Union imposed financial transaction tax (FTT), warning that such a measure would make the continent uncompetitive and create difficulties for companies looking to raise funds.

The rules being considered by 11 European Union members will likely be extraterritorial, such that all stock, bond and derivatives trades would be affected across the world if the trade involved any of those 11 states.

Mark Hemsley, chief executive of BATS Chi-X Europe:

The number one example of that is the financial transaction tax which in the end will be extremely harmful for Europe, especially if it stretches into extra-territoriality and becomes the next trade war, as it were.

Eduardo Refinetti Guardia, chief financial officer of BM&F Bovespa exchange:

The impact on the capital markets was very negative. We started to see companies listing in the U.S. At the end of the day what really happens is that you export your markets.

Tomoyoshi Uranishi, senior executive at the Tokyo Stock Exchange:

[The tax would be] a very bad influence over the world economy.

If the FTT is introduced extensively, I think most of the trading weight will shift from Europe to Asia and America.