We argue that a financial transaction tax complements financial market regulation. With the tax, governments have an additional instrument at hand to influence trading activity. FTT aims to reduce regulatory arbitrage, flash trading, overactive portfolio management, excessive leverage and...

The issue of whether a tax should be levied on transactions of financial assets (FTT) has been controversial ever since it was proposed by Keynes (1936). The debate turns on the answers to three questions. First, is there excessive trading in financial markets which causes exchange rates, stock...