Mostly… fixed income and cross product eTrading

August 27, 2009

Speculative Trading

Filed under: 2015, etrading — holky @ 9:19 am

A Tobin tax is now threatened by Lord Turner, FSA Chairman, to stop ‘excessive’ bonus payments, by reducing opportunities in speculative trading.

Assuming this is intended to be a tax levied on every single fx trade from every participant in the fx market (to penalise speculators from punters through to tier1 banks), and one cant net out any liability (well that would miss the point wouldn’t it), then everybody will need to report every fx trade done in order for this to be fully policed. Whether that reporting is ‘just’ an extension to FSA transaction reporting, or an interesting project for exchanges and trade reporters, it certainly doesn’t sound like its cheap, easy, or quick to implement ..or indeed to police – here presumably needing to audit OTC trades reported against payments in/out of bank accounts; taking into account all nets and splits along the way.

I wonder if the real threat is not a tax on every fx transaction, rather it’s that there would be a dumbed down version that would emerge; something that could be agreed by all states involved, and then implemented within a time frame of a couple of years. Still, think MiFID, with change comes opportunity, and just think of all of the hitherto-unforeseen knock-on effects that could be monetized.

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