<i>The EU is imposing a tax on financial transactions</i><p>The devil is in the details, but at first glance that looks like an absolute disaster in terms of stock trading. For example, if a mutual fund bought a stock twice in a year, and then sold that stock twice in a year, that&#x27;s 0.4% being gifted to the government right there? From just that mutual fund. And another 0.4% from whoever is on the other side? Wow!<p>Am I reading that right?<p>Also it says &quot;financial institutions&quot; but looks like it will also apply to individuals. The Wiki page says <i>&quot;If acting on behalf of a client, e.g., when acting as a broker, it would be able to pass on the tax to the client.&quot;</i><p>I think that could dry up trading volumes by about 95% in the affected countries. For example, when I sell stock now, a market maker takes the other side. But he won&#x27;t want to if he has to pay 0.1% for the privilege. So now I can&#x27;t sell a stock to an intermediary? I need to wait for another investor or a mutual fund to take the other side of my trade?<p>What am I missing? That can&#x27;t be right?<p>Edit: one immediate thing that sticks out is that &quot;derivatives&quot; will be created to replace stocks, since the tax savings is about 90% by doing that. For example, let&#x27;s say a stock costs $10.00. Why not create an &quot;American style&quot; call option on that stock, strike price $0.01, expiration date 2099. The value of that option is $9.99. But the tax rate is 0.01% on the derivative, vs 0.1% on the stock itself. Someone hasn&#x27;t thought things through here.