National Press Club

NASDAQ Chief Opposes Securities Transaction Tax

January 21, 2010 | By Tejinder Singh |

Bob Greifeld

Bob Greifeld

The top executive of the world’s largest exchange company blasted the Congress for moving toward a securities transaction tax as a way to “punish” Wall Street for the excesses of the past decade.

At a Newsmaker Jan. 21, Bob Greifeld, chief executive officer of NASDAQ OMX Group, said, “I’m not speaking of the 'TARP tax' or 'financial crisis responsibility fee,' which the administration discussed last week, but something very different: a tax on all securities transactions that would cause a long-term change to functioning markets.”

“This tax would introduce new and unnecessary friction to our markets, markets that functioned well even during the worst of the financial crisis in the fall of 2008,” he said.

“Good ideas, funded by capital, produce jobs,” is the point of intersection between Main Street and Wall Street, he said, defining the role of Wall Street “to provide the ability to raise capital to grow jobs for Main Street.”

"Rather than encouraging capital formation, these proposals would damage our equity and ownership culture," Greifeld said, adding that "past efforts to tax the functioning of the markets have failed."

Sweden introduced a 1% tax in 1984 but later doubled it, causing its volume of shares traded circa 1990 to slip more than 50%, Greifeld said.

Greifeld said when China tripled its 0.1% transaction tax in 2007, "the markets fell by 6.9% in only a few hours," although that action stemmed from concern that the Chinese markets were overheating.

Greifeld warned that the move could trigger a trade flow to overseas markets, badly damaging liquidity for U.S. investors.

On the question of the recently catching-up method of “co-location,” where trading firms are placing computer terminals next to exchanges to lower their trading times, Greifeld stressed the need for immediate regulation.

Greifeld threw his support behind the upcoming broad review by theSecurities and Exchange Commission of how equities markets function and inclusion of the supervision of co-location in the review.

"We are in fundamental support of the regulation of the co-location business. We have run the business as from day one expecting to be regulated," Greifeld said.

"We support the fundamental premise of the SEC that we provide fair and equal access with a common charge for all participants in co-location services," he said.