European Union - Financial Transaction Tax Overview
Financial Transaction Tax (FTT) is a tax levied on specific financial transactions such as purchases of equities, etc. to be implemented under enhanced cooperation procedure in the European Union. It is expected to be in effect from January 1st 2016.
Once EU FTT is in force, financial institutions in 11 EU member countries will be required to implement considerable enhancements to their processes related to financial securities transactions. This requires the firms to implement significant changes to their existing trading platforms related to reference data feeds extraction, tax computations, payments and reporting procedure to the regulatory authority.
Potential business impact once FTT Goes live:
- Impact on trading strategies and the products that each desk/location has a mandate to trade
- Impact of FTT costs on end investor
- Impact on market liquidity and product pricing (financial modelling)
- Risk management procedures required to monitor compliance with the FTT norms
- Settlement process to deal with FTT across a diverse range of financial instruments
What we offer?
Tech Mahindra has developed a FTT computation engine which is powered by Lavastorm Analytics Engine to address our customers and financial Institutions needs in complying with these complex compliance standards. The solution can further be enhanced to:
- Incorporate tax in cost of trade for best execution identification.
- Report tax deductions, effects of netting & rebates to clients and regulatory authorities.
- Out of the box integration components for easy integration with enterprise systems.
- Flexible data processing framework which could be scaled up for different tax jurisdictions.
- Agility in creating/ amending business rules without the need for long development iterations.
- High level of traceability across all the steps of data flow for increased transparency.
- Scalability to process high volumes of transactions within short processing times as required by largest global financial institutions.