FX Transaction Cost AnalysisFX Trading Costs Could Face Huge Increase

If the financial transaction tax is imposed on currency trades in Europe, three things will happen: FX Desks will move to the US and Asia, liquidity will be reduced, and bid/ask spreads will widen.

The unique thing about FX is that they will also have to apply the tax to corporate hedgers, ultimately penalizing multinational corporations for mitigating currency risk.

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