1/4% Tax on all stock trades pushed in NY Times today

(Reuters) - A media report that German Chancellor Angela Merkel is not serious about implementing a European financial transaction tax threatens to undermine an initial deal struck last week with the opposition to help win support for the EU's planned fiscal pact.

Der Spiegel weekly reported on Sunday that Merkel's Chief of Staff Ronald Pofalla had said such a tax would not get passed in the current legislative period and that was why her centre-right coalition could look as if was accommodating the opposition.[...]

http://www.reuters.com/article/2012/06/10/eurozone-germany-pact-idUSL5E8HA0ZQ20120610
 
Quote from RangeTrader:

HFT is great for smaller traders... But rips off investors and large players...
More...

Quote from FightTheFuture:
Article mentions CIO Sauter of Vanguard saying FTT would cost the typical long-term investor in funds 2 percent annually. The site requires registration now, free I guess.
https://home.investmentnews.com/cli...nvestmentnews&CSAuthReq=1:273447768469238:AID


Most everyone hates HFT. Some of that hate may be legitimate because of certain antics, but taxing HFT and yourself right out of investing and trading...? There are other ways.


Excerpts from a letter to the SEC from Vanguard:

April 21, 2010

The recent financial crisis has caused terms like "dark pools" and "high frequency trading" to become part of everyday political discussion. Accordingly, some have called for immediate action to regulate and restrict certain aspects of our equity markets. In many cases, these "solutions," often couched as efforts to "penalize Wall Street," are not based on empirical data and do not take into consideration down-stream consequences to the markets at large and the collateral impacts to long-term investors.

Vanguard and its investors have benefited from the competition that today's market structure facilitates. Over the past fifteen years, the competition among trading venues and significant technological advancements have greatly reduced transaction costs for all investors across our markets.

As the number of trading venues increases, discrepancies in prices across those venues will naturally result. The price discrepancies across multiple markets create an opportunity for nimble traders to make a small arbitrage profit by scouring the markets for these discrepancies and eliminating them. As the number of trading venues expands, the number of such arbitrage opportunities increases. So, it is not surprising that we have seen a tremendous increase in trading volume over the past decade, and that the activity is increasingly dominated by "high frequency traders." While Vanguard does not engage in this type of trading, we recognize that such trading has a positive impact on the markets at large, including longer term investors. Such arbitrage trading enables investors to get a fair price across market centers. Vanguard believes that the market structure changes facilitated by the Commission's various regulatory initiatives and the "knitting" together of the marketplace by "high frequency trading," have led to a significant decline in transaction costs for long-term investors over the past ten years through increased liquidity and tighter bid-ask spreads.

Various groups have attempted to quantify the reduction in transaction costs over the last ten to fifteen years. The Commission will continue to receive this data throughout the comment period. While the data universally demonstrate a significant reduction in transaction costs over the last ten to fifteen years, the precise percentages vary (estimates have ranged from a reduction of 35% to more than 60%). Vanguard estimates are in this range, and we conservatively estimate that transaction costs have declined 50 bps, or 100 bps round trip. This reduction in transaction costs provides a substantial benefit to investors in the form of higher net returns. For example, if an average actively managed equity mutual fund with a 100% turnover ratio would currently provide an annual return of 9%, the same fund would have returned 8% per year without the reduction in transaction costs over the past decade. Today's investor with a 30 year time horizon would see a $10,000 investment in such a fund grow to approximately $132,000 in 30 years, compared to approximately $100,000 with the hypothetical return of 8% associated with the higher transaction costs. This roughly 25% decrease in the end value of the investment demonstrates the impact of reduced transaction costs on long-term investors. Thus, any analysis of "high frequency trading" must recognize the corresponding benefits that long-term investors have experienced through tighter spreads and increased liquidity.

Vanguard believes any analysis of market structure must focus on the goal of maximizing liquidity.

Gus Sauter
George U. Sauter Managing Director and Chief Investment Officer The Vanguard Group, Inc.
http://www.sec.gov/comments/s7-02-10/s70210-122.pdf
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Merkel strongly backs financial market tax - spokesman:

http://in.reuters.com/article/2012/06/11/eurozone-germany-tax-idINB4E8G701C20120611

(Reuters) - German Chancellor Angela Merkel is convinced of the need for a European financial transaction tax and will raise the issue at a meeting later in June with the leaders of Spain, France and Italy, a government spokesman said on Monday.

"We are not the only ones in Europe who have a say over when such a tax should be implemented, but we will campaign for this with great vigour," Steffen Seibert told a regular news conference in Berlin.

A media report at the weekend that Merkel is not serious about implementing a European financial transaction tax threatens to undermine an initial deal struck last week with the opposition over the EU's planned fiscal pact.

Der Spiegel weekly reported on Sunday that Merkel's Chief of Staff, Ronald Pofalla, had said such a tax would not get passed in the current legislative period so the centre-right coalition could support the idea in principle knowing it would not have to act on it any time soon.

But government spokesman Seibert said Merkel fully supported the idea and would campaign for it.

"The chancellor personally is convinced of the necessity of this and will raise this issue at a four-way meeting in Rome with Spain, France and Italy on June 22," he said.
 
Quote from listedguru:

Merkel strongly backs financial market tax - spokesman:

"The chancellor personally is convinced of the necessity of this and will raise this issue at a four-way meeting in Rome with Spain, France and Italy on June 22," he said.
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We know exactly what will happen. All four will issue a statement after June 22 saying they fully support the FTT at EU level. Knowing it isnt going to happen anytime soon at the EU level.
 
what eu?

it is doomed, will cease to exist soon

france is holding on to this tax. that is it.
the us, england, singapore,hongkong will party because they will get a lot of business from places like france
 
The European Commission signaled for the first time Wednesday it is ready to approve a group of countries moving ahead with a financial transactions tax which wouldn't apply across all 27 countries of the European Union, a spokeswoman said.

In a briefing with reporters, Emer Traynor, spokeswoman for Tax Commissioner Algirdas Semeta said the EU's executive continues to hope its transactions tax proposal will be adopted by all 27 EU member states.

But she said given the "big pressure to move forward now with this project and to reach swift decisions" on it from those member states who back the tax, the commission would be ready to give the go-ahead to a "smaller group."

"[The] commission would be ready to do anything that it could to support member states who are willing to push ahead," Ms. Traynor said.

She said EU finance ministers will discuss "next steps" on the tax at the June 22 meeting in Luxembourg.

Under EU rules, a minimum of nine member states can move forward on a joint proposal under the so-called enhanced cooperation procedure. But this can only happen as a last resort and only if the commission approves this and a qualified majority of member states support it.

Earlier this year, France, Germany and others were signatories to a letter from nine member states saying they wished to forge ahead with the tax. But the measure is strongly opposed by the U.K., Ireland and Sweden among others who have said they would veto the tax at the level of the 27 member states.

The commission last year proposed a levy on shares, bonds and other securities it believes could raise around EUR80 billion annually by 2020. But even some of the member states that back the tax have suggested they may change the tax proposal presented by the commission.

The European Parliament, which has no veto over the issue, has also backed the tax although it called for the scope of the levy to be broadened.

http://online.wsj.com/article/BT-CO-20120613-704733.html
 
This is the danger of European socialists. Which is basically the foundation of odumbo and the democrat party. By today's standards, JFK would have been a republican. The US democrats want European socialism. You've been warned.
 
Quote from Explorer:

The European Commission signaled for the first time Wednesday it is ready to approve a group of countries moving ahead with a financial transactions tax which wouldn't apply across all 27 countries of the European Union, a spokeswoman said.

In a briefing with reporters, Emer Traynor, spokeswoman for Tax Commissioner Algirdas Semeta said the EU's executive continues to hope its transactions tax proposal will be adopted by all 27 EU member states.

But she said given the "big pressure to move forward now with this project and to reach swift decisions" on it from those member states who back the tax, the commission would be ready to give the go-ahead to a "smaller group."

"[The] commission would be ready to do anything that it could to support member states who are willing to push ahead," Ms. Traynor said.

She said EU finance ministers will discuss "next steps" on the tax at the June 22 meeting in Luxembourg.

Under EU rules, a minimum of nine member states can move forward on a joint proposal under the so-called enhanced cooperation procedure. But this can only happen as a last resort and only if the commission approves this and a qualified majority of member states support it.

Earlier this year, France, Germany and others were signatories to a letter from nine member states saying they wished to forge ahead with the tax. But the measure is strongly opposed by the U.K., Ireland and Sweden among others who have said they would veto the tax at the level of the 27 member states.

The commission last year proposed a levy on shares, bonds and other securities it believes could raise around EUR80 billion annually by 2020. But even some of the member states that back the tax have suggested they may change the tax proposal presented by the commission.

The European Parliament, which has no veto over the issue, has also backed the tax although it called for the scope of the levy to be broadened.

http://online.wsj.com/article/BT-CO-20120613-704733.html
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It will be very interesting to see if they can come up with 9 EZ yes votes. I think they probably won't when it comes right down to it.

-Guru
 
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