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Old Jan 15th, 2012, 07:07 PM   #49
gkishot
 
 
Join Date: Jul 2005
Posts: 1,820
Quote:
Quote from failed_trad3r:

maybe not. if fills today are worser due to HFT frontrunning, bid/ask spread might widen but in reality go smaller. Yes you will literally see it widen, but these spreads can effectual be smaller without HFT frontrunning. this is my hypothesis. HFT disappear, and investor won't notice much difference at all because they stop losing money to frontrunning order flow HFT. That said, daytraders will die.
Daytraders provide liquidity and make the markets efficient. You don't want to be in the market with no liquidity fearing that you won't be able to sell. If you are investor you should not concern yourself with daytraders anyway. Just because you failed as a trader it does not mean all daytraders must vanish.

If you so for the transaction tax then all the professionals including market makers should be taxed as well no exception. Can you do that?
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Old Jan 16th, 2012, 05:51 AM   #50
bwolinsky
 
 
Join Date: Jul 2008
Location: KCMO, Kansas and Kentucky
Posts: 4,975
Quote:
Quote from failed_trad3r:

maybe not. if fills today are worser due to HFT frontrunning, bid/ask spread might widen but in reality go smaller. Yes you will literally see it widen, but these spreads can effectual be smaller without HFT frontrunning. this is my hypothesis. HFT disappear, and investor won't notice much difference at all because they stop losing money to frontrunning order flow HFT. That said, daytraders will die.
A white paper I read for my Senior Internship showed conclusively that decimalization reduced transactions costs significantly by decreasing spreads. You cannot expect by adding taxes as inefficient as FTT that that will decrease volatility, or provide a more "efficient" market because if you remove liquidity you're guaranteed a horrible outcome, including millions of lost jobs, debt, and depression, not just stagnation.

All of that is guaranteed by economics as well as all the research that's been done on the topic. Your position is moronic and naieve.
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Old Jan 16th, 2012, 06:58 AM   #51
nLepwa
 
 
Join Date: Feb 2010
Posts: 302
Current tax of 0.1% proposed by France is too high.
It would kill medium-term investing.

For instance our main fund trades 1-2 times a month which is quite low. Still the tax would kill us.

However a smaller tax (0.01% maybe) would help get rid of HFT and make the market more efficient.

Ninna
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Old Jan 16th, 2012, 07:24 AM   #52
bwolinsky
 
 
Join Date: Jul 2008
Location: KCMO, Kansas and Kentucky
Posts: 4,975
Quote:
Quote from nLepwa:

Current tax of 0.1% proposed by France is too high.
It would kill medium-term investing.

For instance our main fund trades 1-2 times a month which is quite low. Still the tax would kill us.

However a smaller tax (0.01% maybe) would help get rid of HFT and make the market more efficient.

Ninna
Wrong, wrong, and wrong.

The tax no matter how small will significantly decrease liquidity.

Both will be deadly to any market stupid enough to implement this.

The 0.1% especially is because of CFD trading based on 0.1% commission schedules, so, thinking that that's transferrable to stocks, will kill the liquidity investors need to be able to participate in big moves. The only way the moves will swing if this tax hits from that point on will be down, and nothing else.

They will lose millions of jobs, reduce GDP drastically more than the paltry incorrect estimate between 1.2% and 3.7%.
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Old Jan 16th, 2012, 09:34 AM   #53
tortoise
 
 
Join Date: Nov 2005
Posts: 2,714
Quote:
Quote from nLepwa:

Current tax of 0.1% proposed by France is too high.
It would kill medium-term investing.

For instance our main fund trades 1-2 times a month which is quite low. Still the tax would kill us.

However a smaller tax (0.01% maybe) would help get rid of HFT and make the market more efficient.

Ninna

Agree with bwolinsky.

Also, taxes NEVER make a market--any market--more "efficient." That's not the purpose of a tax. In my experience, attempts to sell a tax with the argument that its implementation will render some economic activity more "efficient" are either disengenuous or ignorant.
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Old Jan 16th, 2012, 11:47 AM   #54
failed_trad3r
 
 
Join Date: Oct 2009
Posts: 1,774
Quote:
Quote from bwolinsky:

A white paper I read for my Senior Internship showed conclusively that decimalization reduced transactions costs significantly by decreasing spreads. You cannot expect by adding taxes as inefficient as FTT that that will decrease volatility, or provide a more "efficient" market because if you remove liquidity you're guaranteed a horrible outcome, including millions of lost jobs, debt, and depression, not just stagnation.

All of that is guaranteed by economics as well as all the research that's been done on the topic. Your position is moronic and naieve.
I read a post by Zerohedge that decimalization enabled bigger and better frontrunning than ever before. I.E. decimalization led to an adjustment of the VWAP that is used to buy stock. The VWAP goes higher, even though it should have been lower. So the liquidity you see is FAKE. (ex. flash crash).
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