ICAP stressed that treating overseas branches of firms impacted by the FTT less favourably than those operating through subsidiaries was not compatible with the freedom of establishment, a core element of the Union's single market. The firm insisted that the proposed FTT appeared therefore to run counter to established EU Treaty freedoms.
Additionally, ICAP claimed that even though the FTT proposal included an exemption for issuers of public debt, it did not seek to safeguard secondary market trading of the debt, which could increase the cost of funding and capital burden for governments.
Michael Spencer, CEO of ICAP, said: "It is particularly ironic that London, as one of world's leading financial centres, will generate the lion's share of this revenue and act as collection agent, despite the UK being outside the FTT zone and our government being vehemently opposed to the introduction of this tax.
ICAP stressed that the FTT would "significantly" raise costs for corporates and would push many firms around the world to undertake "major" systems change in order to be able to collect the tax as there is currently no collection mechanism in place.
The firm finally warned against the risk of introducing the FTT for repurchase (repo) transactions as this would "significantly" increase banks' short-term funding costs.
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