It looks as though the scope of the tax will be pretty limited. It will only apply to trading in French securities where stock market capitalization exceeds EUR1bn (EUR1.23bn), and a 0.01% tax is to be levied on credit default swaps and on speculative “automated” trading. Nevertheless, it is very definitely a move in the right direction.
To encourage politicians outside France to take the plunge, I thought I would have a quick look at the level of transctions in some of the biggest organisations.
First, let's take CLS group. According to the most recent report, "in June, CLS settled an average daily value of US$5.12 trillion, up 13.5% from those recorded in May (US$4.51 trillion)". Hmmm.... $5.12 trillion a day. With around 250 trading days a year, that makes 1280 trillion dollars worth. Put a tax of 0.01% on that lot, and it would generate over a hundred billion dollars of much needed revenue.
I also had a look at NYSE Liffe, which does most of its European trading in London. You can download their latest numbers in an Excel file from here. Usefully, they provide summary data for the years from 2006 through 2011. The numbers are in thousands of dollars, and I have made a graph for you to enjoy.
You can see that the Total Exchange Value for 2010 went through the $1000 trillion barrier, although it did slip back to a mere $981.6 trillion in 2011. Since NYSE Liffe very conveniently publishes all their trading numbers every day, they could very easily impose an FTT on all that lot. It's one line of code in their software. I'll tell you what, I'll happily write the code for them to do it free.
So, in sum, there is plenty of potential for generating revenue with an FTT. Go for it France. And hopefully, other politicians will be joining in soon.
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