Proposed Trader Tax will end short-term trading

THIS WAS PASSED ONTO ME – but I also heard it from Eliot Wickersheimer Principal of Mirus Futures. I hadn’t had much time and was thinking “oh they will add $5.00 or something to each trade” … WRONG!

http://www.foxbusiness.com/video-search/m/21948997/congressman-sounds-off-on-taxing-trades.htm#q=defazio

According to what I have been told – here’s impact on futures trade: The ES is trading at around 720 today and its cash value is 50 times
that, or $36000 per contract. So if you do one round turn on a single
contract, you have $72000 in transactions. The transaction tax is
0.25% of $72000 which is $180, or a little more than 3.5 pts.
Add
commissions and you need to profit 4 pts on average on every trade you
make. This is not a tax on profit, its a transaction tax that you pay
regardless of the outcome of your trade. No one day trades with that
kind of profit factor that I know, or have heard of. That means
daytrading the ES ends, software vendors go out of business, and
exchange revenues drop precipitously. The only private day traders
will be from foreign countries.

This is being promoted as a means to pay for, TARP. Listen to him closely,
he says straight out that he wants to get rid of those unproductive day traders
that work with “little tiny margins and churn”. — Gerald Bryan

TP Commentary …this guy doesn’t understand that in order to have liquid markets, you need speculators. Speculators work on shorter time-frames. In fact, if the CDO market had had more speculators… we might not have been in the mess we are in.

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This Post Has 14 Comments

  1. Is guy for real. We don’t need foreign enemys, we have the “Peter Defazio’s of this country. So sad ! He does not get it !

  2. Is guy for real. We don’t need foreign enemys, we have the “Peter Defazio’s of this country. So sad ! He does not get it !

  3. “In fact, if the CDO market had had more speculators… we might not have been in the mess we are in. ”

    the same mindset you seem to be defending here also created derivatives, and that IS the mess we are in ..

    liquidity indeed

    1. Yes in fact I believe in derivatives. Futures and options are derivatives and we trade both around here. Structured finance worked great for years… that is not the problem. Leverage maybe but not the underlying structuring of debt-products. And then we could get into Moody’s and the other ratings agencies, mortgage brokers, people who bought homes with mortgages they didn’t understand and finally a true misunderstanding of how the brain perceives risk. Again I will refer you to Niall Ferguson’s The Ascent of Money – blaming the bankers is as old as the hills.

  4. “In fact, if the CDO market had had more speculators… we might not have been in the mess we are in. ”

    the same mindset you seem to be defending here also created derivatives, and that IS the mess we are in ..

    liquidity indeed

    1. Yes in fact I believe in derivatives. Futures and options are derivatives and we trade both around here. Structured finance worked great for years… that is not the problem. Leverage maybe but not the underlying structuring of debt-products. And then we could get into Moody’s and the other ratings agencies, mortgage brokers, people who bought homes with mortgages they didn’t understand and finally a true misunderstanding of how the brain perceives risk. Again I will refer you to Niall Ferguson’s The Ascent of Money – blaming the bankers is as old as the hills.

  5. not that seniority has a thing to do with it, but what central banks & fiat currencies (or clipping, other debasements before paper made it all so much easier) have done, every time, is as old as the hills…the relationship is not coincidence. defazio, et al is not blaming the bankers – he’s paying them, & trying to mulct whoever is most easily scapegoated – us evil speculators – to cover the tab.

  6. not that seniority has a thing to do with it, but what central banks & fiat currencies (or clipping, other debasements before paper made it all so much easier) have done, every time, is as old as the hills…the relationship is not coincidence. defazio, et al is not blaming the bankers – he’s paying them, & trying to mulct whoever is most easily scapegoated – us evil speculators – to cover the tab.

  7. If that tax goes forward, traders will find a better market to trade,. I think that Defazio forgets to take into account the power of electronic trading, and how money is moved around the world so quickly.
    To compare the increased stock tax of the Great Depression and expect the same results with today’s wide variety of markets is ridiculous.

  8. If that tax goes forward, traders will find a better market to trade,. I think that Defazio forgets to take into account the power of electronic trading, and how money is moved around the world so quickly.
    To compare the increased stock tax of the Great Depression and expect the same results with today’s wide variety of markets is ridiculous.

  9. Could you recommend any specific resources, books, or other blogs on this specific NLP topic?

    1. Henry, In my opinion, NLP is a pseudo science that does not work. I do not recommend it. The reasons why are a few-fold. #1) I tried it and found it silly. #2) Wikipedia research reports many studies done by the US Military in which the results were negative and #3) if you understand the brain and the role of feelings, emotions, thoughts, it makes sense that changing your language is NOT going to change how you feel about something and if you don’t change how you feel, your actions won’t change.

      I do think it can work in the moment but is at best a band-aid.

      As I don’t support it, I am not familiar with the blogs etc that do.

      Thanks for asking, DKS

  10. Could you recommend any specific resources, books, or other blogs on this specific NLP topic?

    1. Henry, In my opinion, NLP is a pseudo science that does not work. I do not recommend it. The reasons why are a few-fold. #1) I tried it and found it silly. #2) Wikipedia research reports many studies done by the US Military in which the results were negative and #3) if you understand the brain and the role of feelings, emotions, thoughts, it makes sense that changing your language is NOT going to change how you feel about something and if you don’t change how you feel, your actions won’t change.

      I do think it can work in the moment but is at best a band-aid.

      As I don’t support it, I am not familiar with the blogs etc that do.

      Thanks for asking, DKS

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