EU Financial Transaction Tax Shaken as Race for London Jobs Intensifies

London’s bankers have been outspoken about their plans to leave London in light of the Brexit Brexit Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Brexit stands for British Exit, or in reference to the United Kingdom’s decision to formally leave the European Union (EU) as declared in a June 23, 2016 referendum. In a more immediate sense, a tight vote and unexpected result helped drive British pound (GBP) to lows that had not been seen in decades.The day following the referendum, former Prime Minister David Cameron resigned from office where he was replaced by Theresa May, who later resigned from office on June 7th, 2019. Active Prime Minis Read this Term process that is being prepared by the UK government. As they contemplate the move, the European Union is considering a financial transaction tax.

Over the weekend, reports that the effort - which is limited to 10 countries in the EU - has stalled are making the race for London’s financial sector jobs more intense. Some of the main contenders for a new European financial Hub Hub A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method A hub as its name suggests describes the center of activity or a focal point. In terms of finance, the term hub can refer to Hub and Spoke Trading or a liquidity hub. However, the terms are not interchangeable, but they do overlap. Hub and Spoke trading refer to a network that posts bids and offers for an asset and therefore creates a real market. For example, Hub and Spoke trading allow traders to see the other submissions and offers from other traders on the platform. This is a popular method Read this Term are immune from the risks of a financial transaction tax - Dublin, Copenhagen and Amsterdam.

The position of Paris and Frankfurt could be well jeopardized by the proposal, which is currently in discussion in 10 EU countries, but the latest news is positive for the industry.

The participants discussing the details of the proposal are said to be facing substantial hurdles. A Bloomberg report over the weekend cited two officials with knowledge of the matter that stated that the 10 nations lack consensus over possible exemptions for pension funds.

The finance ministers of Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are set to meet in Brussels on Feb 21 to attempt to put the effort back on track.

Banks Unlikely to Move from London if Tax Plans Go Through

In the aftermath of the financial transaction tax decision, the European Union’s bureaucrats could well deter plans for relocation to Paris or Frankfurt. In the case that a financial transaction tax is enacted, the European financial intermediaries’ business prospects are likely to suffer materially.

Any prospective accord is to be met with stiff resistance from Denmark, Ireland, the Netherlands, and Luxembourg. The countries have not committed to the proposal and are not willing to introduce a financial transaction tax. This could lead to even more fragmentation of the European financial system - a scenario which London-based banks fear.

Trump Financial Reg Overhaul Threatens EU Competitiveness

Aside from an EU financial transaction tax, the European Union’s competitiveness is set to come under threat by the overhaul of US regulations. A substantial rollback of the Dodd-Frank Act and the prospects for a new approach to regulatory oversight in the US pose substantial risks to the long term plans of a number of big EU-based banks.

The Trump administration’s Secretary of the Treasury Steven Mnuchin remarked that new bank regulations could be more effective than simply tearing up Dodd-Frank. This is great news for the industry as the new administration is targeting depositor protection, but loosening the shackles of wholesale banks.