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Unbelievable ! French government just created a tax on HFT

Well, it's in french, so use Google Translate

If the trade duration is less than half a second, it will be taxed !



  • fxez 3775 days ago

    I'm typically on the side of market openness and freedom so the idea of a tax is not preferable. However, I do think the exchanges / regulatory bodies could make it a more level playing field by requiring a minimum post time to orders, as EBS does with 250 milliseconds. Yes HF traders will not like this but they are to some extent taking advantage of the systems in place without providing actual market liquidity when they place/cancel probing orders in very short order from colocated locations.

  • JohnLast 3775 days ago

    Thank you for attracting the attention regarding this french decree:

    Décret n° 2012-957 du 6 août 2012 relatif à la taxe sur les opérations à haute fréquence sur titre de capital.

    However it is an application of the french fiscal code: the article 235 ter ZD bis.

    Here I simplify because the french tax law is famous for its complexity of logical rules and internal connections.

    There are two cumulative logic rule conditions: 

    1. That the operation is a high frequency operation:an operation executed by algorythmic and authomatic system  with latency below 0.5 second.

    2. When the high frequency operations relatad with annulations or modification of orders exceeds 80 % from the trading activity for a trading day then the tax is applicable.

    The tax is 0.01 % from the ammount of the annulated or modified orders that exceed the treshold of   80 % of all the orders for the trading day.

    That comes from article  Article 235 ter ZD bis para IV of the French fiscal code.

    The exceptions will not be mentionned here but they concern essentially the market making activities see Article Article 235 ter ZD bis par III in connection with 3° of II of the article 235 ter ZD.

    How can we comment this, we can comment that what is targeted by the french fiscal system is the High Frequency Spamming that is related with the preadatory high frequency trading.

    Here is a nice video explaining what is the problem with he HFT skimming of the market. 

    So there are legal alternatives as says fxez a minimum post time to orders with 250 milliseconds is a legal option, the french choice of taxing the High Frequency Spam is another possibility.

    Se will wait and see what would be the best legal policy.