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Dr. Randolf Roth From Precy Dumlao, Opalesque Asia:

Hedge fund managers who attended the latest Opalesque Netherlands Roundtable have disputed the two major misconceptions about the financial transaction tax in Europe, however the panellists agreed that the new tax regime has a potentially devastating impact.

Dr. Randolf Roth, Head of Market Structure at Eurex Exchange, enumerated the misconceptions and said that the first delusion is the belief that the financial transaction tax would reduce the profits of high frequency and proprietary trading firms, and has no meaningful impact on the buy-side as the tax is just a little extra cost which might as well be absorbed by the broker.

According to Roth, the cost itself is actually substantial. "If you look at derivatives, take the DAX-Futures example, the all-in trading and clearing exchange fee is around 30 cents. A broker would charge his client an all-in fee of around €1.50. Both numbers are in sharp contrast to the tax of about €15. This is ten times the broker commission and 50 times the exchange fee. Clearly the broker cannot absorb the tax, resulting in a substantial impact on the buy-side," he explained.

The second misreading is that the markets will continue to maintain their status quo with the new financial transaction tax. Roth pointed out that looking at a simple m......................

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