The End of Derivatives? What the European Union Model Forebodes, and the Subsequent Stock Market Effect

Ronald A. Stunda

Authors

Ronald A. Stunda

Keywords:

derivatives, security prices, financial transaction tax

Abstract

In 2011 The European Union Tax Commission proposed the establishment of a Financial Transaction Tax (FTT). The FTT was subsequently implemented in France (8/1/12) and Italy (1/1/13). It is also scheduled to be adopted in 9 other European Union states during 2015. Great Britain has thus far failed to accept such a tax. The purpose of the FTT is twofold; minimize and control derivative trading by taxing it, and raise revenues. Opponents of the FTT have suggested that such a tax would increase volatility (i.e., risk) in the securities market and would also lead to a reduction in security trading and a drop in security prices. These are all reasons why Great Britain has thus far refrained from passing the tax.

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The End of Derivatives? What the European Union Model Forebodes, and the Subsequent Stock Market Effect. (2016). Global Journal of Management and Business Research, 15(C11), 7-15. https://journalofbusiness.org/index.php/GJMBR/article/view/1865

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