Illinois House May Consider Tax On Stock, Derivatives Trades
February 28 2011 - 2:04PM
Dow Jones News
An Illinois state representative has introduced a bill that
would tax traders doing business in Chicago's futures, options and
stock markets.
The Financial Transaction Tax Act, introduced late last week by
Rep. Mary Flowers (D., Chicago), would charge one hundredth of one
percent of the value of transactions carried out on markets run by
CME Group Inc. (CME) and CBOE Holdings Inc. (CBOE).
The bill would add to heavier tax burdens borne by exchanges,
brokers and traders in Chicago, which has seen its status as the
"risk management capital of the world" threatened this month by a
proposed merger of major European rivals.
"This state is in dire need of new revenue," said Flowers in an
interview. She said she did not know whether the idea would find
support with Illinois House Speaker Michael Madigan (D., Chicago)
or Governor Pat Quinn, also a Democrat. The party controls both
chambers of Illinois state government.
"I wouldn't put it out there if I wasn't willing to fight," she
said. Revenue from the tax ideally would go toward defraying the
state's education and health-care expenses, she said.
The bill has yet to be assigned to a committee, where it will be
looked at before the entire Illinois House of Representatives would
hear it. The tax would go into effect Sept. 1.
Representatives for CME, which runs the biggest U.S.
futures-trading platform, and CBOE Holdings, operator of the
busiest U.S. stock-options market, had no immediate comment.
Patrick O'Shaughnessy, Chicago-based exchange analyst with
Raymond James Financial (RJF), said he believed the bill was "very,
very unlikely" to become law.
"It would substantially disadvantage Illinois-based exchanges
relative to their competitors and potentially even lead to
Chicago-based exchanges re-locating," he said. "The net result
would be a loss of jobs and perhaps even a loss of revenue for
Illinois."
-By Jacob Bunge, Dow Jones Newswires; 312 750 4117;
jacob.bunge@dowjones.com
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