Thinking about this more: If Eurex liquidity is effected, Eurex could move out of Germany. If they dont, then revenues and their stock price will collapse and they will get snapped up by CME/ICE/EuroNext etc. This will mean eurex traders outside germany wont have to pay the tax anymore. Day traders in germany may feel like leaving the country.. i know i would.
Do you honestly think that 1-Eurex will move out of Germany? 2-They will get bought by a rival? who BTW would have to buy Deutsche Borse as well - not cheap! 3-German traders will leave Germany?
Yes, absolutely. At least, it will start trading elsewhere and volume will move out of Germany... unless foreign entities trading from abroad are excluded from the tax. For example of how this will happen see how ICE is trying to "steal" volume from CME by offering lower commissions. They have little success so far as the contrats are different futures than CME ones (even though with identical terms), i.e. if you open a future trade on ICE you can't close it on CME. Further, volume staying on CME is self-fulfilling. If there was such a huge incentive as trasaction tax, the volume could move overnight. For equities the move is eaven easier than for futures. Many larger companioes alreayd have equities listed in multiple venues. Ultimately, it will be up to each individual German company whether they will want to get their stocks listed in London, Dublin, Amsterdam or Warsaw. German personal-account daytraders will pretty much have to. Banks and larger HFT shops will be excluded from the rule as marketmakers. Hedge funds may have tax dodge here. Because the fund management companies don't trade their money... but rather trade money of a financially independendt entity located somewhere like Cayman Islands, they may avoid trasaction tax altogether unless they trade German stocks etc. Same may work for prop shops.
I take it that you've gone all in short Deutsche Borse then as you're convinced that that Germany is about to lose it's financial hub! I'm telling you now DB and Eurex will be doing volume and based in Germany in some capacity long after you and I are gone. If anyone thinks otherwise they are either nuts or have no idea what they're talking about.
On a positive note, a number of German (and US) companies have been urging regulators to curb speculative activity by hedge funds (as well as "activist shareholders"). So, there certainly is a demand from public companies for a trading venue where short-term trading is penalised.
As far as I know, the Bund future has already been traded on CBOT for some time in the past, but, of course, without much success then. It seems very likely that it will stage a comeback at (now) CME Group, if Germany introduces its transaction tax. Other instruments may follow. I can already hear German politicans crying about this. But then it will be too late. Well, if one refuses to learn from (Swedish) history...
We'll just have to see,but if you're still around in 12 months as Eurex will certainly be and trading decent volume then at that time I'll accept an apology for you being totally wrong.
Not if the 0.01% tax applies to everyone trading on eurex, then you can bet 100% eurex wont be doing decent volumes. However if certain parties are exempt from the tax then eurex will still have a chance.. but i think there is a good chances retail day traders will get shafted.