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Such sweeping changes would blunt the impact of the tax, pushed for by German Chancellor Angela Merkel and popular with voters who blame bankers for the financial crisis. Banks have lobbied furiously against the tax, due to be levied by Germany, France and nine other European states. It has also hit legal challenges from Britain, which will not join the tax but fears being forced to collect it on behalf of other EU states, driving business from London's financial centre.
Under the latest model, the standard rate for trading bonds and shares could drop to just 0.01 per cent of the value of a deal, from 0.1 per cent in an original blueprint drafted by Brussels. That would raise only about €3.5 billion, rather than the €35 billion initially forecast
The tax may now also be introduced more gradually: rather than applying to trades in stocks, bonds and some derivatives from 2014, it may apply next year only to shares. Bond trades would not be taxed for two years and derivatives even later.
Seven months ago, Germany, France and nine other countries - Italy, Spain, Austria, Portugal, Belgium, Estonia, Greece, Slovakia and Slovenia - agreed to press ahead with the levy, having failed to persuade all 27 EU Member States to sign up. Some cash-strapped countries have already begun counting on the new income, a welcome windfall when shrinking economies and rising unemployment are sapping tax revenue. But in a world where billions of euros can be moved at the stroke of a finger, even some of the tax's backers are getting cold feet.
The tax faces many obstacles, including how it should be collected and whether it should be imposed according to where the buyer or seller is based, or where the traded security is issued. In the current design, if either the buyer or seller is based in one of the participating countries, the levy can be imposed even if the transaction takes place elsewhere, such as in London. Luxembourg and Britain fear this will hit trading in their financial centres and could lumber them with the task of collecting the levy, despite not being involved.
Within the group of 11 countries, Italy and France have expressed concerns about widening the tax beyond shares to government debt as both believe it could discourage investors from buying their bonds.