The National Securities Market Commission (CNMV) this Tuesday published a study on the impact of the tax on financial transactions, known as the “Tobin tax”, on the markets. The watchdog concludes that “the negative effect of the tax on Spanish stock trading was limited in absolute terms and relatively short-term.” The supervisor made an analysis of the effects from 2019 to 2021.
The document, prepared by two of the watchdog’s technicians, adds that for companies closest to the threshold from which it is used – 1,000 million capitalization – “they were generally not affected” on aspects such as the volume of negotiations or prices. The deep technical content report always emphasized that the estimated effects were “limited” in both scope and time. The introduction of this tax has drawn considerable criticism because of the impact it could have on share trading.
Among the negative aspects that the tax would have, the body, chaired by Rodrigo Buenaventura, indicates that the design of the tax could reduce the incentive for some long-term investors to participate in the market, as the tax base is calculated from the net. carried out on the day of purchase of shares.
The paper published this Tuesday analyzes several dimensions of liquidity, volatility (both internal and historical) and trading volume of the secondary markets in which Spanish shares are traded. The “Tobin tax”, which came into force in January 2021, taxes the purchase of shares in Spanish companies with a capitalization of more than 1,000 million euros, and the tax rate is set at 0.2%.
The results of the CNMV analysis also highlight that the reduction in the trading level of taxed shares, in turn, led to a “slight” deterioration in liquidity. However, the CNMV concludes that liquidity was “generally” unaffected for companies subject to the tax closest to the €1,000 million capitalization threshold. However, in some cases there was a “deterioration”, a drop in liquidity in the short term, and a decrease in trading volume in the medium term.
On the other hand, volatility, despite increasing in the short term, tended to decrease in the long term. This occurred for both intraday volatility and historical volatility, the CNMV clarifies.
For all these reasons, the CNMV ensures that the negative effect of the tax on the Spanish share contract was “limited” in absolute terms and “relatively short” in temporal scope. Thus, he finds two opposite effects: on the one hand, trading in Spanish shares of the tax decreased after the introduction of the tax, but at the same time, on the other hand, organized markets recovered a small part of trading in these shares. which was implemented in other ways.
The period covered by the data starts on February 10, 2019 and ends on December 23, 2021, and excludes securities with a capitalization of less than EUR 1,000 million.
Source: El Diario