About a-team Marketing Services
The knowledge platform for the financial technology industry
The knowledge platform for the financial technology industry

A-Team Insight Blogs

Why Boris’ Stamp Duty Axe is Irrelevant with an EU FTT Just Around the Corner

Subscribe to our newsletter

By Daniel Carpenter, Head of Regulation at Meritsoft (a Cognizant company).

The race to become Conservative Party leader, and thus Prime Minister, enters into its final stretch, policy ideas are inevitably being thrown around like confetti. As a classic case in point, Boris Johnson has recently pledged to scrap the UK’s Stamp Duty tax, which currently slaps a 0.5% tax on equities trades over £1,000. Undoubtedly this will be met fondly from the industry, but when it comes to taxes, banks need to look more closely at pending implementations, rather than cuts.

Take Financial Transaction Taxes (FTTs). After years of dither and delay, EU finance ministers picked up their discussions for a 0.2% tax at the Council of Economic and Financial Affairs, and now both France and Germany are lobbying for the tax. Similarly, across the pond, Bernie Sanders has put forward an outline for a sweeping FTT plan to finance his education policies. And while it’s unclear what other FTTs may crop up globally if these are introduced, there is no question that FTTs are increasingly coming to the forefront of political discussion.

With this in mind, how best can financial institutions be ready to tackle FTTs? All too often, banks have looked for a quick solution to adhere to a new tax and have failed to revisit the problem until the rules change and it becomes a necessity. In the case of so many pending FTTs globally, now is the ideal time to take a long term view on how to tackle the complexities of tax from an operational perspective.

The technological requirements to calculate all tax bills accurately and consistently are huge and often tricky to implement, particularly when needed from scratch on short term notice, which is entirely possible if the EU give the green light to an FTT. Banks need an effective single system in place to manage the wider transaction tax issue. Many will not have the capability to adapt existing systems for an EU-wide hit on all equity, derivative and fixed income trading. At this point, allocating resources to build on existing systems will be money well spent in the long run.

Similarly, there’s no point in trying to juggle these issues on an individual basis. The global financial landscape is changing and there is an undeniable trend of protectionism. Trying to keep pace with all regulation can be exhausting as well as costly and this only gets worse when trying to tackle multiple different taxes with a number of different solutions. Banks should resist leaving themselves at risk of being in a position where they are running multiple systems managing various tax rules. It could be a huge operational headache.

Being flexible and able to adapt readily to any tax changes will prove hugely useful in an ever-increasingly competitive environment. Regardless of whether the Stamp Duty is changed or not, with the EU and others banging the drum for FTTs, banks have enough to think about when it comes to tax. Only a fully-automated and easily scalable tax calculating engine will enable industry players to keep on top of their operations with vigilance.

Subscribe to our newsletter

Related content

WEBINAR

Recorded Webinar: Proactive RegTech approaches to fighting financial crime

Financial crime is a global problem that costs the economy trillions of dollars a year, despite best efforts by financial services firms, regulators, and governments to stem the flow. As criminals become more sophisticated in how they commit financial crime, so too must capital markets participants working to challenge criminality and secure the global financial...

BLOG

Apex Group to Help Private Markets With MJ Hudson ESG Purchase

Apex Group will harness the ESG data and advisory firepower of its recent acquisition to capitalise on an expected surge in reported sustainability data in its services to private markets, which account for at least a third of financial institutions’ investments. The investor services company’s purchase of MJ Hudson’s ESG software and advisory team boosts...

EVENT

Buy AND Build: The Future of Capital Markets Technology, London

Buy AND Build: The Future of Capital Markets Technology London on September 19th at Marriott Hotel Canary Wharf London examines the latest changes and innovations in trading technology and explores how technology is being deployed to create an edge in sell side and buy side capital markets financial institutions.

GUIDE

Regulatory Data Handbook 2023 – Eleventh Edition

Welcome to the eleventh edition of A-Team Group’s Regulatory Data Handbook, a popular publication that covers new regulations in capital markets, tracks regulatory change, and provides advice on the data, data management and implementation requirements of more than 30 regulations across UK, European, US and Asia-Pacific capital markets. This edition of the handbook includes new...