I am a bit surprised no one has brought up how much income tax revenue the govt would lose from individual traders forced out of trading as well as from the corporations generating much less revenue. You can bet that 150 billion they project is based on current volume and not on the ~20 % that would remain after such a bill was enacted. You kill the vol and that 35% coming from goldman and all the other players is going to dwindle to peanuts.
No one in congress? It's been mentioned many times here. That's the problem with all this. Traders and finance people understand how bad an idea this is.. unfortunately those in power do not.
don't shoot me for thinking this out loud, but is there any chance that a transaction based fee would help wash institutional black box and quant strategies out of the market, taking us slightly back in time towards intraday mkt conditions resembling ~5 years ago? as it stands right now, commission structures are a regressive force against the small player. the larger you are, the less you pay, the faster/more you can trade, less movement to show profit, etc. could something like this actually tilt the intraday back towards real flow and less bot noise? or would it just kill listed mkts and move the entire thing otc.. if it applied equally to otc and listed, it might just move everyone to slightly longer timeframes (assuming it's transaction based and not profit based. also assuming it applied equally to ALL participants/sizes/orders/etc)
There was a paper I posted earlier where it had derived the $150 billion. I still haven't had time to read it (husband is out of town this week and I have two kids...). I know at least one person read it, though. Can anyone shed some light?
I just think such a high % tax on the full value of the trade would make it incredibly difficult for most traders to make money. Even if you can make money, the liquidity would dry up, spreads would widen and it would make it very difficult to make money.
i agree with everything above. seems to me if it's a per transaction "tax" as a % of profit it would hurt everyone equally. but if it's a fixed amount per transaction "fee" applied uniformly, it might actually flush out a little bit of the toughest competition. everyone would have to increase timeframe and high freq bots would thin out. or would it be the same shit market just with super wide spreads. dunno. probably would be. an analogy might be the way markets trade pit vs after going electronic
Of course you can still make money.. It just won't be on the american exchanges. At least we can be thankful we live in the electronic age where its not that hard to trade the european or asian markets. We are small peanuts.. but think about the boom for hedge funds that will flee to tax free markets. It looks like the Obama/Pelosi transaction tax will become a reality sooner or later (in one form or the other).. Just start trading overseas.. I know i will.
if they decide to do this, a fixed per-trade fee is far preferable to a per-trade % of profit tax. imo the more i think about it, i'm starting to like the fixed fee idea assuming it would apply to dark pools, otc, etc - not just listed, and with no institutional or size based loopholes. who knows.... every once in a while there are cold days in hell..
My worry is the dollar. At some point, we're going to push the world too far and lose our status as its reserve currency. The lawmakers aren't even looking at that. If countries have one less reason to have all those dollars and treasury bills/bonds sitting there, they just might start cashing them in for something different. I mean, come on, we've already pissed them off enough and our growth is declining so they won't be able to sell as many gadgets here anyway. Wish I'd start worrying about the dollar a few years ago though
' Everyone will be paying far more that simply a fixed fee.. Try getting in and out of a fast market when there is nobody on the other side to assume the risk. This is not about weeding out the competition.. Liquidity effects all of us.