Financial Transaction Taxes, Market Composition, and Liquidity

European Central Bank Working Paper Series – Financial transaction taxes, market composition, and liquidity
Jean-Edouard Colliard and Peter Hoffmann of the European Central Bank co-author a paper that empirically examines the 2012 introduction of a financial transaction tax (FTT) on equity trading in France. It concluded that the French FTT was to a large extent a disguised tax on savers.  Also, they found “no evidence for the composition effect through which an #FTT is supposed to improve market quality.”