Opposition to the Financial Transaction Tax is growing as associations and corporates around the world wake up to the impact.

The Global Financial Markets Association (GFMA), the Australian Financial Markets Association (AFMA), the Investment Industry Association of Canada (IIAC), the Japan Securities Dealers Association, and the Korea Financial Investment Association (KOFIA) have written to the G20 financial ministers expressing their strong opposition to the EU's proposed financial transaction tax (FTT).  The groups believe the FTT would have unprecedented extraterritorial impacts, contrary to G20 principles, and would harm economic growth. They wrote that the FTT "conflicts with repeated calls by the G20 to avoid measures exhibiting extraterritorial effects." It added that the G20, in its last communique in February 2013 committed itself to minimizing any negative spillovers.

However, they believe that the FTT as it is proposed creates such a spillover. According to the European FTT proposal, the tax, slated to be to be implemented at the start of 2014, would apply to all transactions where:

1. either the buyer or seller is resident in an EU11 country;
2. the security was issued in an EU11 country; or
3. an EU11 financial institution, or any of its foreign branches, is involved in the transaction.

"For example, the FTT would apply to the sale of corporate bonds of a French company by a Japanese bank to a Canadian bank through a US broker-dealer," the associations wrote in their letter. And "The FTT will increase the cost of equity and debt financing for both governments and corporates, increase the cost of hedging transactions undertaken in the real economy in order to manage risk, and create a further headwind to the global economic recovery."