The fury about the impact of the Financial Transaction Tax in Europe may be having an impact on the authorities. Euromoney reports that “expectations are growing that the European Commission is preparing to water-down it controversial financial transaction tax.” 

Only 11 member states had committed to introducing FTT. The main concern of the other countries was that the FTT would substantially raise companies’ cost of wholesale funding.

The change would mark a notable reversal of the proposal, which in its current form relates to all secondary market share, debt and derivatives transactions executed in 11 of the 28 European Union member countries. 

The watered-down proposal might be accepted by more states and is certainly more acceptable to the treasury associations. 

Inevitably already experts are predicting that some markets might use derivatives to synthesize equity exposure to escape the tax. 

European Commission blunders on, however, a decision needs to be made quickly as the Financial Transaction Tax is due to go live in mid 2014.