LONDON, March 1 A new Italian tax on financial transactions and high-frequency trading came into force on Friday. It applies to cash equity instruments and will be followed by a tax on derivative contracts from July 1.
Following is a summary of the measures. More details can be found on www.mef.gov.it/en/index.html
For a story on the impact, see
TAX ON CASH EQUITIES
* The tax applies to shares issued by companies domiciled in Italy with a market capitalisation of more than 500 million euros ($654 million) and covers depositary receipts listed abroad.
* Investors are charged 0.12 percent of the value of the shares they buy in a regulated market or on a regulated trading platform -- known as multi-lateral trading facilities (MFTs) -- such as BATS Chi-X or Turquoise.
* The tax rate is 0.22 percent for transactions conducted "over the counter" -- directly between dealers and investors rather than via an exchange.
* These rates will be cut to 0.1 and 0.2 percent, respectively, from next year.
TAX ON DERIVATIVES
* Derivative transactions will be subject to a tax from July 1. The amount of the tax, which will be levied on both the buyer and the seller, depends on the notional value of the contract.
TAX ON HIGH FREQUENCY TRADING
* A separate 0.02 percent tax is imposed on transactions in the Italian financial market if an order is issued and then amended or cancelled within half a second, and the ratio between the cancelled or amended orders and the completed ones is greater than 60 percent per single financial instrument.
* The tax does not apply to units of open-ended investment companies or exchange traded funds (ETFs).
* European pension funds are also exempt, as are brokers when they act as market makers or liquidity providers
* Stock lending, repurchase agreements, primary market transactions, such as share issues, and investments that qualify as "ethical" or "socially responsible" under Italian law are not subject to the levy.
* The European Central Bank and other supranational entities are also exempt. ($1 = 0.7649 euros) (Reporting By Francesco Canepa, editing by Nigel Stephenson)