Analysis of European Commission staff working document on the proposed Financial Transaction Tax (Oxera, AFME)

May 2013

KEYWORDS: Financial Transaction Tax, FTT, risk management, government debt, capital raising, market making, derivative, tax, pensions, EU Member State, European Commission, European Council, Association for Financial Markets in Europe, AFME, Liquidity, stock, swaps, hedging, International Capital Market Association, ICMA, Sweden, futures, Italy



  • Oxera, AFME


The European Commission published a staff working document (SWD) on February 14th 2013 on the proposed financial transaction tax (FTT). The SWD is entitled ‘Implementing enhanced cooperation in the area of financial transaction tax: Analysis of policy options and impacts’.

Since the publication of the SWD, stakeholders have raised questions with the Association for Financial Markets in Europe (AFME) as to the validity of the Commission’s arguments. In response, AFME commissioned Oxera to critically review the Commission’s assessment of policy options and impacts, and to comment on whether the Commission’s proposals are consistent with other regulatory objectives. This Oxera report builds on previous work done by Oxera on the impact of the FTT.

Oxera finds that the FTT will make some transactions uneconomic, including some activities involved in market making, trading of government debt, and repurchase agreements (repos). The Commission assumes that the transactions that are deterred have little or no wider economic value, despite there being evidence that these transactions do have value.

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