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!
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.