Securities Lending Today

Guest Author on the Financial Transaction Tax

2012-01-25T11:45:17+00:00

The debate continues on the Financial Transaction Tax. The guest author today examines the comments from "Mr Financial Transaction Tax" at the EU. Philip Martin is the former co-head of global tax at Nomura and is now providing investment banking tax services via his company Henleydown Consulting Limited. You can reach Philip at henleydown@btinternet.com

Last week Manfred Bergman the director of indirect taxation and administration at the European Commission released a video to explain the Commission’s proposal for a financial transaction tax “FTT” (Video is below). Mr. Bergman confirms the purpose of an FTT is to raise money from the financial sector and to limit undesirable market behaviour to stabilise markets. Mr. Bergman believes a widely applied charge at a low rate will be easily absorbed, but demonstrates this with reference to the marginal increase in the cost of share purchases rather than the marginal income earned by broker dealers.

He is therefore guilty of proving his point on affordability by reference to the wrong target audience. Mr. Bergman also accepts that certain activities will significantly reduce, by which we assume he refers to the 70 to 90% reduction in activities such as derivatives highlighted within the European Commissions impact assessment. However, he does not address the dichotomy here which is that an effective tax needs a stable and continuing tax base, and preferably to apply to economic rents, whereas the stated intention is to reduce the number of transactions and hence the underlying tax base. As a result the estimate revenues of € 57bn must be highly questionable.

Mr. Bergman also does not make clear how the proposal will be limited to intra-bank market transactions. In a simple transfer of stock from one counterpart to another via a single broker-dealer there would appear to be four charges unless an intermediary exemption is introduced. There is no logical reason for an intermediary to bear the cost of an agency bargain and therefore investors will inevitably bear the cost and, with the multiplication of charges, a rather higher cost than advertised. It is important that there is an open and transparent debate about new forms of revenue, but at present the real issues and difficulties with an FTT remain unclear.

Wrapping up the Securities Lending Week

2012-01-13T13:27:44+00:00

Just a quick note to give you a few updates:

Consob, the Italian regulators have extended their short selling ban on banks and insurers until 24 February.

I'm appearing on the N@ked Shorts Club (Resonance FM online and 014.4FM in London) on Monday 16th January. Hosted by the good Dr Stu, his guests Monday include Dr Chris Jones - CIO, Key Asset Management; Daniel Page, MD, Cornerman; Matthew Robers, Towers Watson; Margie Lindsay, Editor, Hedge Funds Review; Joe Seet, Senior Partner Sigma; the highly technical Leroy Couverman and Poet in Residence, Royal Academy of Arts, Pele Cox.

IMN - Beneficial Owners Securities Lending conference 29 - 31 January in Phoenix. Click here for more info.

PASLA/RMA 9th Annual conference 6 - 8 March in Taipei. Click here for the brochure.

FinTuition courses: Introduction to Securities Lending in London (24 January) and Amsterdam (2 February) and Performance Analysis of Hedge Funds in London (6 & 7 February)

The latest version of our Trading Apps portfolio evaluation tool is now live. I'm really excited by this and it is being launched at the right time of the year. Let me know if you'd like to hear more about it.

The poll on regulations is closed now. Next week I will write more about pending regulations and securities finance.

Have a groovy weekend.

P.S. My birthday today - dominated by Krispy Kremes. Gym tomorrow.

Introduction to Securities Lending Course 2012

2012-01-12T08:19:29+00:00

The International Securities Lending Association ("ISLA") and FinTuition have been running a one day introductory securities lending course for the past 18 months across Europe. We have taught the course in Amsterdam, Frankfurt, London, Stockholm and Zurich with over 150 people in attendance.

We continually update the "Introduction to Securities Lending" course with current data and commentary on important trends and we are back for 2012. We start the programme again in 2012 on 24 January in London. We follow that on 2 February in Amsterdam, and we will return to Zurich, Stockholm and Frankfurt. Additionally, we will be going to Dublin for the first time.

Which markets are hot, which are not? Were the 2011 short selling bans in France, Italy and other countries successful? What about collateral transformation - boom or bust? Are the risks increasing or decreasing? These are just some of the questions we will look at on the day.

The course is designed for those people who are interested in learning more about the business. This includes investors that lend their securities that are looking for an examination of the activity free from their service providers; those people who may be involved in securities lending, but only on a peripheral basis; or those that have a single-focus involvement and need a broader understanding of the business.

We hope to see you somewhere across Europe this year!