According to FOX Business, fueled by momentum in Europe, some U.S. lawmakers are looking to introduce a tax on stock transactions in an effort to discourage computerized trading that tends to increase volatility in the markets.
It’s a move Democrats Tom Harkin and Peter DeFazio believe will raise $352 billion for the government over the next decade, while minimizing high frequency trading (HFT), often blamed for broader inefficiencies within market structure.
The bill’s biggest adversaries, however, warn an umbrella tax could trickle down to retail investors and mutual funds while simultaneously discouraging investing. They argue for less broad measures to stem HFT, such as cancellation fees.
“I don’t think this is the solution to any high frequency trading problems. It would just hurt the market overall.,” said Dennis Dick, a prop trader at Bright Trading and market structure consultant.