22 October 2017
Steve Grob

Fidessa Fragmentation Index

Steve Grob - Fidessa

137Posts 529,629Views 3Comments

Not even wrong

26 July 2013  |  4099 views  |  2

Gently easing my way back into the daily grind after my annual vacation I came across the report that MPs in London are proposing to tax HFT. They must have been drinking more sangria than I have over the past few weeks. For a start, any tax aimed at changing behaviour needs to be very clear about what behaviour it is targeting and the preferred outcome it is trying to achieve. As everyone knows, HFT has no formal definition. The politicians say they want to prevent investors taking very short-term positions - but what about day traders, what about electronic market makers that basically provide the oil that lubricates nearly every market worldwide? Second, there is no definitive proof that HFT is actually harmful to markets - yet again I fear this is politicians trying to leap on the populist bandwagon of "doing something" about the finance industry. Yes, some people break the rules (as they do in every walk of life) and when they get caught they are punished. Finally, and perhaps incidentally, it won’t work. Are they proposing to tax firms trading in the UK, those trading in UK stocks from abroad, those trading the derivatives of those instruments? The challenges of extraterritoriality will ensure that the market will find a way to dodge any such legislation.

As the renowned theoretical physicist Wolfgang Pauli said when shown a piece of sloppy analysis: "Not only is it not right, it's not even wrong!" 

TagsTrade executionRisk & regulation

Comments: (2)

Neil Crammond
Neil Crammond - trader - london | 29 July, 2013, 09:36

politicians see ££££ signs where they can collect an income .... I wrote after the may 6th 2010 debacle that we would have to offer a sacrifice to the regulators ......... i offered a cancellation tax  .

 This would protect the end user as a 1 second rule would be enforced and penalise the guilty fast traders who provide no liquidity and have given market a bad name .

"Not only is it not right, it's not even wrong!"  Sadly exchanges going down this trading route has never been right ; as as more respected companies get caught their punishments appear to be a trickle of their cheating profits .......... perhaps "cheats always prosper !"

 

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
A Finextra member
A Finextra member | 29 July, 2013, 17:43

When will politicians ever learn? Taxing HFT is just about the most stupid idea yet. Demonstrating almost unbelievable lack of knowledge of markets or what the markets do need. That is a incorporating structure that allows HFT to sit within a new market structure. We need imagination and innovation but get just tired old Tax. Madness!

Be the first to give this comment the thumbs up 0 thumb ups! (Log in to thumb up)
Comment on this story (membership required)

Latest posts from Steve

Why you’ll never be ready for MiFID II

12 September 2017  |  4686 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

So that's nice and clear...

31 August 2017  |  5332 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

Relocation, Relocation, Relocation

14 June 2017  |  5692 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

MiFID II - the best thing that ever happened?

08 June 2017  |  8715 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulation

Be careful what you wish for

26 April 2017  |  5419 views  |  0 comments | recomends Recommends 0 TagsTrade executionRisk & regulationGroupMiFID

Steve's profile

job title Director of Group Strategy
location London
member since 2009
Summary profile See full profile »
I am responsible for strategic development at Fidessa. This includes the development of new geographic markets and strategic partnerships and driving new industry initiatives. As part of this I head u...

Steve's expertise

Member since 2004
130 posts3 comments
What Steve reads

Who's commenting on Steve's posts