In line with the G-20, the European Union has set three justifiable objectives for regulating the European financial markets: strengthen transparency, increase stability and ensure that the financial sector shares in the costs of the crisis. As a provider of reliable and highly regulated market infrastructures, Deutsche Börse Group strongly supports the pursuit of transparency and stability in the financial system. In suggesting a financial transaction tax (FTT), the EuropeanCommission is adding its support for these objectives. It is, however, questionable whether the objectives can be achieved with such a tax.

1. “ tax on financial transactions would be a gift to the unre­ ­
A g
ulated and non-transparent financial centres of the world.
Only sustainable strengthening of the regulated markets
e
­ nsures greater transparency and stability.”
Dr Stefan Mai
Head of Market Policy European Public Affairs,
Deutsche Börse Group
Will the financial
t
­rans­ ction tax achieve
a
its ­ bjectives?
o
Published by
Deutsche Börse AG
60485 Frankfurt/Main
Germany
www.deutsche-boerse.com
Phone +49-(0) 69-2 11-1 39 80
Fax +49-(0) 69-2 11-1 39 81
Email info@deutsche-boerse.com
February 2012
Order number 1012-4297

2. The objectives of the financial The FTT will force the wrong parties
t
­rans­ ction tax
a to share in the costs of the crisis
In line with the G-20, the European Union has set three justi­ It is unlikely that the financial transaction tax will be able to
fiable objectives for regulating the European financial markets: meet the financial expectations that have been placed on it.
strengthen transparency, increase stability and ensure that E
­ mpirical studies have concluded that by moving financial
the financial sector shares in the costs of the crisis. As a pro- t
­ransactions beyond the scope of the tax’s applicability its
vider of reliable and highly regulated market infrastructures, p
­ otential revenue will be lower by up to two thirds than expected.
Deutsche Börse Group strongly supports the pursuit of trans­ And the lion’s share of the desired financial ­ ontribution will
c
parency and stability in the financial system. not stem from those who caused the crisis. In fact, the opposite
is true; small and medium-sized companies in particular will
In suggesting a financial transaction tax (FTT), the European face higher capital-raising costs as a result of rising transaction
Commission is adding its support for these objectives. It is, costs. Savers and private households would also suffer greater
h
­ owever, questionable whether the objectives can be achieved financial losses as the tax would directly hit their retirement
with such a tax. provision ­ roducts.
p
The FTT will result in less transparency Potential conflict between objectives and impacts
of a financial transaction tax
The financial transaction tax will increase transaction costs in
European financial centres. This will result in a huge shift of
3 justifiable regulatory objectives
f
­inancial activities to non-transparent and unregulated markets.
The tax thus benefits all those who reject the lessons of the n uropean financial market transparency must be improved.
E
inancial system stability must be strengthened.
F
financial crisis and plan to continue their trading activities ­ utside
o
n
financial sector should make a fair and substantial contribution
n
The
the scope of regulatory supervision. In so doing, it ­ eakens
w to the costs of the crisis.
p
­ recisely Europe’s regulated and transparent market ­nfrastructure
i
and consequently also contradicts the regulatory measures taken
in the past years, such as the European Market Infrastructure
Regulation (EMIR).
3 undesirable impacts
n inancial transactions will migrate to unregulated and non-transparent
F
markets.
The FTT will affect system stability n ystemic risks will remain unchanged; they will only fall out of scope of
S
the regulator’s surveillance and control.
The migration of financial activities to non-regulated niches n
The tax burden will be borne by parties uninvolved in the financial crisis
puts them beyond the reach of European regulators. However, (real economy, savers).
Europe still remains subject to the risk of many transactions.
In a globally linked financial system there is no longer any
p
­ hysical relationship between the location in which a transaction
is concluded and the location exposed to the risk.

3. The objectives of the financial The FTT will force the wrong parties
t
­rans­ ction tax
a to share in the costs of the crisis
In line with the G-20, the European Union has set three justi­ It is unlikely that the financial transaction tax will be able to
fiable objectives for regulating the European financial markets: meet the financial expectations that have been placed on it.
strengthen transparency, increase stability and ensure that E
­ mpirical studies have concluded that by moving financial
the financial sector shares in the costs of the crisis. As a pro- t
­ransactions beyond the scope of the tax’s applicability its
vider of reliable and highly regulated market infrastructures, p
­ otential revenue will be lower by up to two thirds than expected.
Deutsche Börse Group strongly supports the pursuit of trans­ And the lion’s share of the desired financial ­ ontribution will
c
parency and stability in the financial system. not stem from those who caused the crisis. In fact, the opposite
is true; small and medium-sized companies in particular will
In suggesting a financial transaction tax (FTT), the European face higher capital-raising costs as a result of rising transaction
Commission is adding its support for these objectives. It is, costs. Savers and private households would also suffer greater
h
­ owever, questionable whether the objectives can be achieved financial losses as the tax would directly hit their retirement
with such a tax. provision ­ roducts.
p
The FTT will result in less transparency Potential conflict between objectives and impacts
of a financial transaction tax
The financial transaction tax will increase transaction costs in
European financial centres. This will result in a huge shift of
3 justifiable regulatory objectives
f
­inancial activities to non-transparent and unregulated markets.
The tax thus benefits all those who reject the lessons of the n uropean financial market transparency must be improved.
E
inancial system stability must be strengthened.
F
financial crisis and plan to continue their trading activities ­ utside
o
n
financial sector should make a fair and substantial contribution
n
The
the scope of regulatory supervision. In so doing, it ­ eakens
w to the costs of the crisis.
p
­ recisely Europe’s regulated and transparent market ­nfrastructure
i
and consequently also contradicts the regulatory measures taken
in the past years, such as the European Market Infrastructure
Regulation (EMIR).
3 undesirable impacts
n inancial transactions will migrate to unregulated and non-transparent
F
markets.
The FTT will affect system stability n ystemic risks will remain unchanged; they will only fall out of scope of
S
the regulator’s surveillance and control.
The migration of financial activities to non-regulated niches n
The tax burden will be borne by parties uninvolved in the financial crisis
puts them beyond the reach of European regulators. However, (real economy, savers).
Europe still remains subject to the risk of many transactions.
In a globally linked financial system there is no longer any
p
­ hysical relationship between the location in which a transaction
is concluded and the location exposed to the risk.

4. “ tax on financial transactions would be a gift to the unre­ ­
A g
ulated and non-transparent financial centres of the world.
Only sustainable strengthening of the regulated markets
e
­ nsures greater transparency and stability.”
Dr Stefan Mai
Head of Market Policy European Public Affairs,
Deutsche Börse Group
Will the financial
t
­rans­ ction tax achieve
a
its ­ bjectives?
o
Published by
Deutsche Börse AG
60485 Frankfurt/Main
Germany
www.deutsche-boerse.com
Phone +49-(0) 69-2 11-1 39 80
Fax +49-(0) 69-2 11-1 39 81
Email info@deutsche-boerse.com
February 2012
Order number 1012-4297