Trading Tax Would âDecimateâ Markets, NYSEâs Niederauer Says
Email | Print | A A A
By Edgar Ortega
March 4 (Bloomberg) -- The proposed tax increase on stocks and derivatives trading that is intended to help pay for the Wall Street bailout would have a âsevere impactâ on investors, NYSE Euronext Chief Executive Officer Duncan Niederauer said.
âIt would decimate liquidity in the market in an unprecedented way,â he said late yesterday at the Museum of American Finance in New York. âThat would be about the worst thing that could happen, but I donât believe it will get any traction.â
Representative Peter DeFazio, an Oregon Democrat, introduced legislation last month that would require exchanges to collect a tax equal to 0.25 percent of a tradeâs value. The proposal, backed by seven other Democratic representatives, could raise $150 billion a year to mitigate the costs of the U.S. Treasuryâs rescue plan for banks and brokerages, according to the Feb. 13 draft of the legislation.
Brokerages currently pay $9.30 for every $1 million traded in stocks and options, and less than half a cent for the purchase and sale of future contracts. The money helps fund the U.S. Securities and Exchange Commission.
Molly Simmons, a spokeswoman for DeFazio, didnât immediately return a telephone message seeking comment. None of the sponsors of the proposal are members of the House Ways and Means Committee, which would be responsible for the legislation.
The Security Traders Association, a 75-year-old New York- based group representing investors and brokerages, said last month that the tax may exacerbate the financial crisis by undermining markets. While credit markets seized up last year as more borrowers fell behind on their debt payments, trading on equity, options and futures exchanges spiked to records because investors adjusted their holdings to stem losses.
âItâs effectively trying to punish someone for breaking curfew by burning down the neighborhood,â said William OâBrien, chief executive officer of Direct Edge Holdings LLC, the fourth- largest U.S. equity market by shares traded. âThere is not even a causal connection between the trading firms that would pay the lionâs share of this tax and the underlying sources of the issues we are facing.â
Email | Print | A A A
By Edgar Ortega
March 4 (Bloomberg) -- The proposed tax increase on stocks and derivatives trading that is intended to help pay for the Wall Street bailout would have a âsevere impactâ on investors, NYSE Euronext Chief Executive Officer Duncan Niederauer said.
âIt would decimate liquidity in the market in an unprecedented way,â he said late yesterday at the Museum of American Finance in New York. âThat would be about the worst thing that could happen, but I donât believe it will get any traction.â
Representative Peter DeFazio, an Oregon Democrat, introduced legislation last month that would require exchanges to collect a tax equal to 0.25 percent of a tradeâs value. The proposal, backed by seven other Democratic representatives, could raise $150 billion a year to mitigate the costs of the U.S. Treasuryâs rescue plan for banks and brokerages, according to the Feb. 13 draft of the legislation.
Brokerages currently pay $9.30 for every $1 million traded in stocks and options, and less than half a cent for the purchase and sale of future contracts. The money helps fund the U.S. Securities and Exchange Commission.
Molly Simmons, a spokeswoman for DeFazio, didnât immediately return a telephone message seeking comment. None of the sponsors of the proposal are members of the House Ways and Means Committee, which would be responsible for the legislation.
The Security Traders Association, a 75-year-old New York- based group representing investors and brokerages, said last month that the tax may exacerbate the financial crisis by undermining markets. While credit markets seized up last year as more borrowers fell behind on their debt payments, trading on equity, options and futures exchanges spiked to records because investors adjusted their holdings to stem losses.
âItâs effectively trying to punish someone for breaking curfew by burning down the neighborhood,â said William OâBrien, chief executive officer of Direct Edge Holdings LLC, the fourth- largest U.S. equity market by shares traded. âThere is not even a causal connection between the trading firms that would pay the lionâs share of this tax and the underlying sources of the issues we are facing.â
