Author : Martin Haferkorn
Publisher :
ISBN 13 :
Total Pages : 39 pages
Book Rating : 4.:/5 (13 download)
Book Synopsis Securities Transaction Tax and Market Quality - The Case of France by : Martin Haferkorn
Download or read book Securities Transaction Tax and Market Quality - The Case of France written by Martin Haferkorn and published by . This book was released on 2013 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: The French Securities Transaction Tax (also referred as French Tobin Tax) implementation on August 1st, 2012, is considered a landmark development within financial markets regulation. However, until today the controversy about possible drawbacks and applicability of a Securities Transaction Tax (STT) has not reached a conclusion and consequences for market quality and market efficiency are yet to be thoroughly assessed. In this light a rigorous assessment on the STT's effect on market quality and market efficiency is highly desirable as it provides guidance for academics, regulators and practitioners alike. On the basis of a comparison of the French CAC40 with the German DAX, we provide evidence that trading volume significantly drops after the introduction of the STT. Even though the French proposal exempts professional liquidity providing activities, we find increased spreads and a strong decline in top order book depth resulting in additional costs for market participants beside the transaction tax. Most alerting, as the tax affects trading on all French listing venues, we find this deterioration in market efficiency threatening inter-market information transmission by impairing price coordination among the European fragmented markets.