Tobin Tax Effect on Forex

i found an english source regarding this
http://www.reuters.com/article/2012/...8MO0SB20121124

Thanks for the news on this and English version.

I still stand by my words but will be willing to eat them should I be proven wrong. Should this ever change:

One of the best things propping up USA and UK from defaulting on its debt is trading with more commodities in a day that simply do not exist, for e.g. they trade more silver than actually exists in the world, they manipulate gold and oil prices as well as silver price, not specifically countries (directly) but they do benefit from this in a number of ways. Some call it currency wars or trading wars, but in reality it has always existed in early modern civilisations thousands of years ago and this is how things balance out even if it has bias for super rich. I cannot see how they would sacrifice their $quadrillions worth of high frequency trading (some would say fake money but then all money is debt based issued money in circulation is the same so hypocritical for pointing this out) in NYC and City of London for a FTT that will destroy its very foundation and possibility to operate, unless they have another backup plan to replace this way of trading. If they want BRIC nations to take over econimically and then every other way they will allow a FTT with no backup plan. And it will mean an end to all derivatives as we know it, including Forex, even OTC spot trading. Derivatives are more important to banks than Forex is to them because they can make easily make quadrillions from it. Why pay another tax on a tax, on a tax, on a tax on a tax? In the Uk we also have employers tax where companies have to pay taxes just to employ people which is inaddition to the employees paying their income taxes of 50% if they are higher income earners then we are on par with France! How many taxes does one have to pay, even a death tax we call inheritance...I wish we could start taxing politicians on their nonsense policies for every one they come up with, charge a reverse royalty fee for each time it is used or misused, including any laws. That would soon end their career and make them work better.

In the UK we have a tradition of having bankers as Prime Minsters / Lord Of Treasury, Tony Blair was able to afford many houses, mansions and mortgages than his pay as a PM would ever had allowed him to, while in power and so could Eward Heath and many other PMs. Heads of State or leaders; they do what President Obama does and that is what they are told to do by the banksters! Obama made a nice law allowing banks to be bailed out and set an example for the whole planet to follow in, instead of following the lead of what Iceland did that are now fully recovered and have since repaid back their defaulted debts. Obama also absolved/made banks immune from being investigated for fraud or other crimes when they accepted this gift from the tax payer. Obama can also pardon people should he want to just as other CiC can, as if he were a Royal himself he has the power to pardon accused criminals. Wall St. accounting continues as normal (also with politicians statistics) but NYC is more regulated now than it was before, whereas London already had strong regulation. Look at the US and see their banksters that now are politicians, on both sides of the coin, Democrats and Republicans. Look at the UK cabinet of ministers and you will see quite a few banker millionaires protecting their interests for their former employers. I can say we are securely represented as traders, even if we are not part of their club, their current policy suits us. Both Cameron and Clegg has banking background and I see it as a prerequisite to be a PM in the UK or you must have very strong relations and support from such associations. We know give the BOE powers to regulate banks and they now have the responsibility so I can see the government will go quiet on banking regulation and allow the better people to handle their own affairs, even if it is with a Canadian governor that is more than capable of this job, I am sure he will get his citizenship through the proper channels and be prepared to wait up to ten years in queue for this to be approved as our government has told us. Not really...even the BBC news reader laughed at this. Smart Money or the people that caused this crisis were the first ones to get their money out of the markets, they created it all artificially the value of marekts by inflating them and then they took their money from this to be sure it was safely secured away from the markets. This happened at the latest mid - late 2006. They also are not held accountable nor will any bankers. Banks do what they are told, trade or facilitate trades for their investors.

We also know it is not just banksters and their ilk that like high frequency trading, government does, but who else? Energy companies do! The City of London will not allow a FTT in England or USA to happen. This is my firm belief and if I am wrong I am equally happy to admit it should the day ever come.

There are studies that show high frequency trading helps to make economies stable, whether we believe this to be based on fact or not is another matter. Right now USD is still strongest currency even if EUR is higher valued, and the obvious reasons are its hegemony on commodities and it will stay this way until the USA ceases to be a super power. I am not saying I like the way in which things operate or how the world is economically (im)balanced, but it has been this way for centuries and is not going to change any time soon, not unless certain countries collapse and or dissolve first, the EU is far more likely to have this happen to them than the USA. Just my 2pips.

New push from the EU to implement tobin:

http://www.businessworld.ie/bworld/l....htm?a=3026271

http://online.wsj.com/article/SB1000...900398620.html

yeah Tobin is back and strong...
Now the big question: is FOREX a derivative or not...actually, rahter is it a derivative for these politicians or not...cause they will apply Tobin on derivatives, 0,001 % both ways..
If they find a way of tackling FOREX which is big, undefined, hard to find cause it´s everywhere...and over complex, they will...not easy, but I bet they will try...
If we are lucky, some big bank lobbiysts might convince the idiot poiliticians to be satisfied for the moment with stocks options, etc...
Always good for elections...Merkel said no in the beginning a couple of years back, but now they discovered people believe it will solve all the financial problems, or almost...so now she says yes...elections are coming....

Yes sure it's a proposal. But they can't change what they want. They excluded FX for a reason. Quote out of proposal "Also, currency transactions on spot
markets are outside the scope FTT, which preserves the free movement of capital."

To the question whether trading the "regular" Forex is derivate:

"Any financial instrument that locks in a future foreign exchange rate. These can be used by currency or forex traders, as well as large multinational corporations. The latter often uses these products when they expect to receive large amounts of money in the future but want to hedge their exposure to currency exchange risk. Financial instruments that fall into this category include: currency options contracts, currency swaps, forward contracts and futures contracts.

source: http://www.investorwords.com/7910/fo...#ixzz2IlV4oedS

Imho Forextrading (no matter if MM or not) is Spot trading. Why? The instrument is the same, and its not relevant how your broker handle your order, the trading instrument is the same.



Btw., someone mentioned that CFD's are out of scope. This is not true. According to the proposal following are included: forwards, futures, options, swaps and contracts for difference (CFD)


I advise everybody to read the site of the european union, instead of press articles, as information is much more accurate and reliable. Here's the link. especially the short presentation/summary of the proposal is interesting, as well as the proposal itselfs.

Tobin Tax = Asian financial centre's rapid growth
Asia hasnt conformed to the EU's Carbon ETS and this will no doubt be the same .

I advise everybody to read the site of the european union, instead of press articles, as information is much more accurate and reliable. Here's the link. especially the short presentation/summary of the proposal is interesting, as well as the proposal itselfs.[/quote]


That was good advice, this is an excerpt of one statement

"It
emerges from the definitions used that spot currency transactions are not taxable financial
transactions, while currency derivative agreements are. Derivative contracts relating to commodities
are also covered, while physical commodity transactions are not."

Wonder if this is cause for hope...

Hi, I moderate a thread in another forum regarding the FTT and a few traders made ​​some interesting posts and I unfortunately think they are right (sry it's german):

"Und im Währungshandel müßte man direkten Zugang zum Kassamarkt der Forex haben. Alle "angelehnten" Handelssysteme und Produkte, die sich noch einen kleinen Spread rausschneiden, sind dann schon wieder steuerpflichtig, ebenso wie der Forex Future etc"

"Völlig richtig. Wer über eine CFC-Bude EUR/USD Kassa handelt, handelt natürlich ein Derivat.
Direkten Zugang zu diesen Markt haben... s. oben. Diejenigen, die was bewegen könnten, denen aber Privatanleger wurscht sind"

"Seid ihr euch da sicher?"

""Auch Währungstransaktionen am Kassamarkt
unterliegen nicht der Finanztransaktionsstreuer, wodurch die Freiheit des Kapitalverkehrs gewahrt
bleibt. Derivatkontrakte auf der Grundlage von Währungstransaktionen unterliegen hingegen der
Steuer, da es sich dabei nicht um Währungstransaktionen als solche handelt."

"Aus den verwendeten Begriffsbestimmungen geht hervor, dass
Währungskassatransaktionen im Gegensatz zu Währungsderivatkontrakten keine steuerpflichtigen
Finanztransaktionen sind."

A short summary in engl: Only banks with direct access to the interbank market are exempt from the tax. All retail traders who trade via cfd/currency brokers are trading derivatives and have to pay the tax. That means no more scalping! All currency traders have to pay at least 0.02% per round turn. Why at least? Because each country can increase the tax at its own discretion. Do yourself a favour and practice trading/trade only the higher TFs from now on.

Here are the countries which agreed to install the tax: Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain.

So even if you live in one of those countries that imposed the tax all you have to do to avoid it is use a broker in another country, right ? I assume it's the kind of tax that's withheld by the broker, not the kind where they put you in jail if you don't self report. Romania has a 1% forex profit tax collected by the broker; all you have to do to avoid it is use one based in another jurisdiction.

There is no way to avoid the tax when you live in one of the called countries! They will apply the residence principle what means you have to pay the tax regardless where you trade.

I don't think that person understands the meaning of derivatives. Retail forex traders trade SPOT forex, they do not trade derivative contracts. So regardless of the spread and regardless of the broker, if it's SPOT it means quotations come from the interbank market (although at higher spreads) and it's not derivative.

Another issue: if this tax does apply to SPOT forex trading (although I doubt it will) and to a point where it will be impossible to dodge by financial institutions - it means volatility will increase in the market in order to account for the tax so we're gonna see longer moves on the same timeframes. So nobody's gonna quit scalping.

Yes, that's what the latest form of the tax says. No problem - if you live in a country where the tax will be installed, just incorporate a company in London and open an account for that company. All brokers will adapt and will accept companies.

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http://www.economist.com/news/leader...dropped-bin-it

I'm not disputing what you're saying cause I dont know the details of this thing. But how the heck are they gonna collect that tax if I use a foreign broker US, Singapore etc ? Are they expecting me to make a note of every trade I take, calculate 0.02% of it and declare it in a tax form and if I fail to do the math they impose on me send me to jail ? They should realize the majority are simply not gonna bother with it.

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INTERESTING: can you imagine if SPOT FOREX ends up being the ONLY excemption....

THEN, all those millions and millions of Traders and day Traders (S&P, Dax, stocks, Options, futures, minis, scalpers, etc....)...will come running to Forex.

Wellcome to the biggest Casino in the Universe ladies and gentlemen...place your bets here, Drinks at the bar...Bunny Ladies are offering cigars in the trading rooms.....

[quote=cuchuflito;6468806] What does S&P have to do with the European Financial Transactions tax?!

The FTT will be imposed on SOME European-issued instruments and on SOME European financial institutions, you think Londoners or New Yorkers will pay tax for trading the S&P500 ?!

The tax in itself is an exception, everything else will just go by their business.

[quote=cuchuflito;6468806] The EU plan invokes “residence” and “issuance” ties to firms in participating nations, in a bid to prevent traders from escaping the levy by trading outside the tax’s zone, according to the proposal unveiled by EU Tax Commissioner Algirdas Semeta today in Brussels. To escape the proposed tax entirely, firms in other nations would have to entirely cease financial-services business with the 11 nations involved, according to the EU.

http://www.bloomberg.com/news/2013-0...atchwork-.html

Only the financial instruments, financial institutions and citizens of the 11 nations involved are subject to this tax, everybody else is not. Which is fair enough - if we vote Communists in power, we have Communist rules to go by.

First of all politicans are stupid and clever at the same time. They argue that high frequency trading will be not longer possible so that the volatility will decrease. Banks can't be bound by the residence rule. There will be some retail traders who have to exit the market but it will not have an impact on the volatility.

Back to the topic: These guys are traders who know the market micro structure. They know exactly (like me and everybody else should do who trades) what the difference is between spot trading and derivatives.

The retail broker business is a third tier retail market. I'm too lazy to write an detailed statement therefore I'll copy Darkstar's explaination:

"When brokers like Oanda, Forex.com, FXCM, etc. desire to establish a retail operation the first thing they need is a liquidity provider. Nine in ten of these brokers will sign an agreement with just one bank. This bank will agree to provide liquidity if and only if they can hedge it on EBS inclusive of their desired spread. Because the volume will be significantly higher a single bank patron will transact, the spreads will be much more competitive. By no means should it be expected these tier 3 providers will be quoted precisely what exists on the Interbank. Remember the bank is in the business of collecting spreads and no agreement is going to suspend that priority.

Retail forex is almost akin to running a casino. The majority of its participants have zero understanding how to trade effectively and as a result are consistent losers. The spread system combined with a standard probability distribution of returns gives the broker a built in house advantage of a few percentage points. As a result, they have all built internal order matching systems that play one loser off against a winner and collect the spread. On the occasions when disequilibrium exists within the internal order book, the broker hedges any exposure with their tier 2 liquidity provider."


The market which will exempt from the tax is the first tier market. The intention behind that is to not tax the physical currency transaction by enterprises. So when you are not a customer of one of the big banks you have no direct acess to the interbank market.
Retail brokers want to get paid. They add something to the spread they get offered and offer it to you.


What we do are no currency transactions according to the definition of the eu. There is a high probability that the retail trading will be classified as derivative trading. I'm not saying it will happen for sure. I only want to warn you.

You have to file a tax return every month.