UK Lawmakers Push For Transaction Tax On High-Frequency Trading
Friday, 26 July 2013
A panel of lawmakers have said that they believe the UK government should seriously consider the introduction of a transaction tax on high-frequency trading, in order to deter very short-term investors.
The advice comes in the wake of findings by economist John Kay who conducted a review into the UK equity market in 2012, commissioned by Business Secretary Vince Cable to look at how existing market structures and incentives were affecting the longer-term investment options for companies.
The panel of lawmakers, from across all parties of the house, endorsed the 17 recommendations of John Kay’s report and called on Prime Minister David Cameron to look into how he and his government could grant long-term investors with preferential voting rights during corporate takeovers.
Some of the recommendations in the report were that the pay of asset managers should be linked more closely with the interests of investors, that fewer middlemen should be involved when buying shares and that individual investors should be strongly encouraged to hold shares directly, rather than through a firm.
In 2010 just 11.5% of shares were directly owned by individual investors, compared with some 54% back in 1960, indicating a significant shift from owning to trading that regulation had simply failed to keep up with. The committee of lawmakers further add that “the government must bring forward proposals to enhance the culture of long-termism, transparency and accountability”