Europe Mulls a Major Blow To High-Frequency Traders

According to highfrequencytraders.com, EU Ministers are meeting today to discuss a transaction tax which could see high frequency trading driven out of certain markets. President Sarkozy believes proceeds from the tax could help fight poverty and climate change, but there is a risk they could have serious economic consequences.

It’s always easy to demonize things that people don’t understand. Perhaps that’s why high frequency trading seems to draw so much ire. When HFT is not being painted as the major source of instability, it is depicted as some kind of financial parasite, feeding off the market and giving nothing in return.

Chancellor Merkel and President Sarkozy’s finance ministers are meeting today to discuss the details of the proposal. France and Germany would need to build a coalition

High-Frequency Trading Leaders Forum 2011

of willing countries in Europe and the G20 in the next two months to make progress with the proposal. However Brazil, South Africa and Korea all have some form of financial transaction tax already in place, and are obvious allies.

As highlighted recently in The Guardian by Max Lawson, Oxfam’s Head of Policy and Advocacy, supporters of The Robin Hood Tax are suggesting a way to redress this perceived imbalance; Slap a levy on every high frequency transaction and use the proceeds to fund global development projects that tackle hunger and disease in the developing world.

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