October 16, 2012 / 8:00 PM / 5 years ago

Deutsche Boerse: transaction tax won't rescue banks

DUBLIN, Oct 16 (Reuters) - Deutsche Boerse’s chairman Joachim Faber appealed for politicians to reconsider introducing a transaction tax, arguing it will punish financial market players without proving to be an effective policy tool for stopping bank failures.

Speaking in Dublin on Tuesday, the German executive said such a tax, “will not rescue the banks.”

Policymakers in Germany, Italy and Spain are pushing to introduce a tax on trades as a way to help fund bank rescues without needing to resort to taxpayer funds.

The Tobin Tax, named after economist James Tobin who mooted the levy in 1972 to curb market volatility, has become a political symbol of a wider desire to make banks and hedge funds pay for the financial crisis.

“We have still the belief it will be recognised that if you want to really punish banks, that you really don’t necessarily want to introduce an instrument which is punishing 70 percent others,” Faber said, adding he was hopeful that continued dialogue with policymakers would help find a “sensible solution.”

Separately, Faber said the German stock and derivatives exchange operator can remain competitive even as rivals like CME Group encroach on European turf with new offerings.

“I think there are plenty of opportunities to grow, even if one of the other foreign players like CME come to the European derivative markets, I don’t think that that would have a material impact,” Faber said.

In August, U.S-based arch rival CME Group applied to Britain’s Financial Services Authority to open a London-based market offering currency futures.

Earlier this year, the European Commission blocked Deutsche Boerse from taking over NYSE Euronext, scuppering efforts by the Frankfurt-based exchange operator to grow through transformational deals.

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