MFA Blog

FTTs Put a Dent in French and Italian Trading

Posted on August 5, 2013

Recently enacted financial transaction taxes in France and Italy have been affecting trading in France and Italy.  According to a recent Reuters article, while trading volume in Europe is up 14 percent in 2013 compared to 2012, trading in France and Italy has fallen 10 percent over that same time period.  Thomson Reuters Equity Market Share Reporter data also show that since the countries launched their FTTs – August 2012 for France and March 2013 for Italy – “their market shares have fallen as much as 30 percent and 45 percent, respectively,” the article noted.

These numbers come as broader European trade volume has increased.  “You have seen an uptick in the volume numbers across Europe but the difference is it’s now focused on UK and Germany; it’s not returning to France or Italy,” Rebecca Healy, senior analyst at TABB Group, told Reuters.  As she noted, many investors are turning instead to other markets such as those in Germany and the United Kingdom, while still others are looking at other market areas not impacted by the tax, such as contracts-for-difference, in which investors bet on the price movement of a stock without actually owning it.

Reuters highlighted the fact that, due to the fall in trading and market share, Italy could end up collecting as little as one-fifth of the projected €1 billion from the FTT; France could see as little as one-third of the projected €800 million.  According to Reuters, in France, the market share of French-domiciled stocks against, “that of all other stocks in the European Union and Switzerland has fallen as much as 30 percent since last July.”  Since the launch of the FTT in Italy, market share of Italy-based stocks has dropped by as much as 45 percent, representing an average monthly share of only 5.9 percent of all EU and Switzerland trades.  This compares to an overall average the year before of 10.8 percent.

Learn more about the financial transaction taxes in France and Italy by reading more from Reuters here.