Potential End of Day-Trading US Stocks and Futures

There is a proposal in the US that Wall Street should pay for its own bailout which would levy a 0.25% tax on all transactions for stocks and futures.

Link Here

If this goes ahead then it is quite possible that day-trading of stocks and futures will become impossible depending on how it is costed. If it is based on the value of the asset involved then day-trading is finished in my view.

An example would be if I wanted to buy 1000 shares at $30 then I would have to find (1000 x 30 x 0.0025) = $75 in addition to normal commissions and that may apply to both buy and sell transactions so would be $150 in total.

For futures it is no better, let's say that the Emini is trading at 750 and take in consideration that a 1 point move is $50 then the cost could be as follows for trading just 1 contract:

(750 x 50 x 0.0025) = $93.75 and if applied both sides would be $187.50. That means you would be 4 points down before even starting

I hope that it does not go through as it will kill liquidity and drive trading away from the US.

Any thoughts ?


Paul

What on earth is 0.25% of a currency/fixed income future? As ou say the trading would be impossible!

I say it will go through, as Jim would say, "the clowns in charge haven't got a clue." They shouldn't have bailed out Wall Street.