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%.
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.
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).