Heads up - French ADR tax Aug 1

Quote from TraDaToR:
But I don't know where does the "untaxed if flat at night" part comes from. I haven't found one line in the law that would suggest that. They tax "all acquisitions" whether you keep positions at night or not.... Perhaps I missed something. [/B]
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saw that in this article:
http://www.iss-mag.com/news/frances-transaction-tax-proves-pretty-taxing


"Ironically, most high frequency trading firms -- which the tax was set to target -- are expected to avoid the tax partially, if not entirely. That is because the tax is based on a net daily buying position at the end of each day, rather than individual gross trades. Case in point: an investor has bought 100,000 French equities and sells 80,000 of the same equities the same day. The investor will pay a tax only on 20,000 shares. Even so, only 108 French equities will be affected and those are in companies with a market capitalization of over 1 billion Euros. Market making activities, as well as securities lending and borrowing activities, among others would be exempt."
 
Quote from mike212:

saw that in this article:
http://www.iss-mag.com/news/frances-transaction-tax-proves-pretty-taxing


"Ironically, most high frequency trading firms -- which the tax was set to target -- are expected to avoid the tax partially, if not entirely. That is because the tax is based on a net daily buying position at the end of each day, rather than individual gross trades. Case in point: an investor has bought 100,000 French equities and sells 80,000 of the same equities the same day. The investor will pay a tax only on 20,000 shares. Even so, only 108 French equities will be affected and those are in companies with a market capitalization of over 1 billion Euros. Market making activities, as well as securities lending and borrowing activities, among others would be exempt."
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So basically all professional day traders and market makers are exempt and the only ones who will be paying this for the most part are retail investors? Those robin hooders sure got what they wanted lol
 
I am sorry but I don't know where they found that in the law. Taxes are to be collected the next day but on every transactions. I haven't seen any reference to overnight positions in the law. Don't take my word for it but still....???
 
Quote from mike212:

saw that in this article:
http://www.iss-mag.com/news/frances-transaction-tax-proves-pretty-taxing


"Ironically, most high frequency trading firms -- which the tax was set to target -- are expected to avoid the tax partially, if not entirely. That is because the tax is based on a net daily buying position at the end of each day, rather than individual gross trades. Case in point: an investor has bought 100,000 French equities and sells 80,000 of the same equities the same day. The investor will pay a tax only on 20,000 shares. Even so, only 108 French equities will be affected and those are in companies with a market capitalization of over 1 billion Euros. Market making activities, as well as securities lending and borrowing activities, among others would be exempt."
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That link appears to be dead. I have asked Goldman to respond to it, can you check it out, or do you have another source?

Thanks,

Don

Never mind, if you go to their home page, and scroll down it's still there.
 
I checked with GS regarding the "net" shares per day discussion. They said that they go by settlement, meaning that if you 100,000 shares and sell 80,000 shares, you pay tax on 100,000 shares, not 20,000.

That's how it is here, at least up to this point.

FWIW,

Don
 
One of our clearing firms won't be collecting for the FTT on ADRs. The other is still looking into it. This JPM release indicates they don't believe ADRs are covered but they are looking for more clarity so have suspended their programs until they get more detail:

https://www.adr.com/Home/LoadPDF?CMSID=d371a9ed57f1441cb729c8b73542baa1

(if link doesn't work try googling: "dr market announcement" July 26)

I think Goldman is just preparing for worst case, and figuring they can keep 20 bps on these buys if their legal dept finds that ADRs are not covered by the tax.
 
UBS sent out a document Friday which confirms that they will collect 20 bps on ADR purchases, same as GSEC. They do indicate the the law only applies to net purchases on the day, however like GSEC they will collect the 20 bps on all purchases - due to the operational issues that would be involved in netting.

"The tax arises on a purchase of securities which results in delivery of those securities to the account of the buyer. Where buys and sells by a person occurring on the same day are offset (leading to delivery of a net end of day position) the tax applies to the net position delivered. Clients wishing to net trades will need to buy and sell the same stock with the same broker, on the same day. Given the core changes to the firm's operational and reporting systems this would require, UBS has decided to apply the tax on a per trade basis."
 
Quote from Don Bright:

Just a heads up to you guys, that I received a call from the higher ups at Goldman this morning to tell us about the French "transaction tax" takes effect on trade date August 1st. This is a 20 BPS tax that will be withheld on the buy amount.

For example, we have a trader who is up $5,000 trading TOT this year, but his transaction tax would have been $12,000. Eliminates this edge. Bummer.

FYI,

Don
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We need to stop the FTT from coming to America.

Get educated at -- http://financialtransactiontaxes.com/

We have a major election coming up. Make sure your congressional representatives know you're against this tax and why you're against it.
 
Great victory today.

I just read in a french newspaper that a syndicate of US bankers( which one ? ) just sent an almost threatening letter to the french economic minister against the extraterritoriality of the new tax. Taxing ADRs would be like the french taxing US people on US soil according to the letter. Pierre Moscovici, french economic minister has scheduled an urgent meeting to amend the law and exclude ADRs.

Extraterritoriality killed before its inception...:)
 
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