&gt; if a mutual fund bought a stock twice in a year, and then sold that stock twice in a year<p>I think the idea is that such moves contribute to the instability of the market as a whole, and hence should pay a small penalty for it.<p>&gt; I think that could dry up trading volumes by about 95% in the affected countries.<p>Yes, it is not entirely clear that large trading volumes contribute anything positive to the economy as a whole. There are real people <i>somewhere</i> in the picture who are trying to buy&#x2F;sell shares in regular and are getting shafted in terms of either buying price or trading fees by high-frequency bots. The tax should even out things a little bit for the average person.