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Will the Financial Transaction Tax (FTT) be the end of the FDAX?
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Will the Financial Transaction Tax (FTT) be the end of the FDAX?

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Will the Financial Transaction Tax (FTT) be the end of the FDAX?

It seems like a European transaction tax of 0.01% based on the underlying of , for example, a futures contract will become active on January 2016. This will be a total disaster for European futures. I am an FDAX trader and I am worried this will be the end of the FDAX. Im a wondering how other traders think about this.

Here is a link of the proposal: http://ec.europa.eu/taxation_customs/taxation/other_taxes/financial_sector/index_en.htm#prop


Last edited by SuperSaan; June 20th, 2014 at 06:02 AM.
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Yep, in my view it will kill the Dax (and any other instruments in the countries that apply the tax) - well at least make it untradeable with not enough liquidity.

Countries that don't follow the tax like UK and Asia will find their futures exchanges will benefit.

This from a trader in NZ who trades Eurex and US futures at present

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steve2222 View Post
Yep, in my view it will kill the Dax (and any other instruments in the countries that apply the tax) - well at least make it untradeable with not enough liquidity.

Countries that don't follow the tax like UK and Asia will find their futures exchanges will benefit.

This from a trader in NZ who trades Eurex and US futures at present

I just read a Dutch article from six weeks ago, it says that it is not known yet to which derivatives it will apply to. Let's hope futures will be excluded.

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A few months ago I was also concerned for this and I called Todays Brokers( = Dutch division of IB) with the question if customers have to pay the tax when trading CAC futures. He assured me customers are somehow excluded from the tax. This was far from a complete and official answer, but since I don't trade french instruments and was only interested I didn't interrogated him further.

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SuperSaan View Post
It seems like a European transaction tax of 0.01% based on the underlying of , for example, a futures contract will become active on January 2016. This will be a total disaster for European futures. I am an FDAX trader and I am worried this will be the end of the FDAX. Im a wondering how other traders think about this.

Here is a link of the proposal: Taxation of the financial sector - European commission

Form the documents of the EU commission, first important :


Who has to pay the tax?
The tax applies to the financial institutions, funds and asset managers that carry out taxable
financial transactions or engage in proprietary trading. It does not apply to retail investors,
pensioners or SMEs.


So retail investors and small companies are excluded.



Theoretic calculation example
If you trade 10 contracts FDAX, underlying value, +/- 2.500.000
the tax could be 250 € (being 0,01% or a full tick)


It is what it is, there will still be arbitrage to level between the underlying index and the future is
the agio/disagio is too big.
The liquidity will be less I agree, but not sure that will kill the market
on the contrary it will remove some of the HFT
that some blame that spoils the market

I think liquidity will be lower and volatility higher

So not so sure that the end game will be so negative.

Further more, in a taxable environment, half of that tax is paid by tax on profit, which reduce net impact to 50%
(assuming a 50% tax rate) ;-)

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rleplae View Post
Form the documents of the EU commission, first important :


Who has to pay the tax?
The tax applies to the financial institutions, funds and asset managers that carry out taxable
financial transactions or engage in proprietary trading. It does not apply to retail investors,
pensioners or SMEs.


So retail investors and small companies are excluded.



Theoretic calculation example
If you trade 10 contracts FDAX, underlying value, +/- 2.500.000
the tax could be 250 € (being 0,01% or a full tick)


It is what it is, there will still be arbitrage to level between the underlying index and the future is
the agio/disagio is too big.
The liquidity will be less I agree, but not sure that will kill the market
on the contrary it will remove some of the HFT
that some blame that spoils the market

I think liquidity will be lower and volatility higher

So not so sure that the end game will be so negative.

Further more, in a taxable environment, half of that tax is paid by tax on profit, which reduce net impact to 50%
(assuming a 50% tax rate) ;-)


Yes, retail investors will be excluded, but brokers not. They will pass the charges through and the retail investor will in the end up with the taxes.

250 Euro's for 10 contracts per transaction, that's 500 Euro's a roundturn per trade. I am taking 10-15 trades a day. For me its way too much, not even counting the extra slippage due to the lower volume.

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SuperSaan View Post
Yes, retail investors will be excluded, but brokers not. They will pass the charges through and the retail investor will in the end up with the taxes.

250 Euro's for 10 contracts per transaction, that's 500 Euro's a roundturn per trade. I am taking 10-15 trades a day. For me its way too much, not even counting the extra slippage due to the lower volume.

yes, two times... you're right
I looked that over

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SuperSaan View Post
It seems like a European transaction tax of 0.01% based on the underlying of , for example, a futures contract will become active on January 2016. This will be a total disaster for European futures. I am an FDAX trader and I am worried this will be the end of the FDAX. Im a wondering how other traders think about this.

Here is a link of the proposal: Taxation of the financial sector - European commission

I met with their senior management in Chicago recently. The word I'm told is that if needed, they will move their matching engine to Switzerland, thereby curtailing the financial transaction tax in EU. Hope this gives retail investors confidence to continue trading in the market.

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artemiso View Post
I met with their senior management in Chicago recently. The word I'm told is that if needed, they will move their matching engine to Switzerland, thereby curtailing the financial transaction tax in EU. Hope this gives retail investors confidence to continue trading in the market.

That makes me happy. Thanks for the reply.

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