Trading Tax Would ‘Decimate’ Markets, NYSE’s Niederauer Says

Trading Tax Would ‘Decimate’ Markets, NYSE’s Niederauer Says
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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 “severe impact” on investors, NYSE Euronext Chief Executive Officer Duncan Niederauer said.

“It would decimate liquidity in the market in an unprecedented way,” he said late yesterday at the Museum of American Finance in New York. “That would be about the worst thing that could happen, but I don’t believe it will get any traction.”

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 trade’s value. The proposal, backed by seven other Democratic representatives, could raise $150 billion a year to mitigate the costs of the U.S. Treasury’s 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, didn’t 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.

“It’s effectively trying to punish someone for breaking curfew by burning down the neighborhood,” said William O’Brien, chief executive officer of Direct Edge Holdings LLC, the fourth- largest U.S. equity market by shares traded. “There is not even a causal connection between the trading firms that would pay the lion’s share of this tax and the underlying sources of the issues we are facing.”

 

Thanks for the article. I wouldn't say this is dead in the water with Pelosi/Obama running the country.

 

Thank you for posting this. Good to hear some heavy hitters coming out against this tax proposal recently.

-Guru

 

Your kidding yourselves if you think this won't pass.

I hope you Obama voters are happy now. It should serve as a lesson to you all about how far out of control the democrats have become.

 

Wanna make a bet?

 

Why would Obama care about daytraders?

Trading tax wold decimate markets?
Aren't they decimated yet?
Don't daytraders lose regardless of market conditions?

 

You are quite ignorant.

DeFazio has been proposing this legislation since 2000. It has nothing to do with paying for the TARP - - - which the last time I checked was an "investment" by taxpayers whose returns won't be known for at least 5 years . . . Hence, everyone can see right through his "agenda".

Think Clinton, Rangel, and Schumer are going to allow NYC to get wiped-out? How about Chicago, or Boston?

DeFazio makes Pelosi look like a "conservative".

This will never pass.

 

2009 is nothing like 2000. And his persistence is scary.

 

You are a loser regardless of your time frame!

 

aha. the jew vs the italian. guess who has more influence in Congress?we are saved