Gaming Out the New Jersey FTT Battle: How IPC Can Help

By Mike Smith, Director Global Exchange Relations Management, IPC

Do trading firms need to start thinking about rerouting large chunks of their trading traffic? A high-stakes fiscal battle has broken out in New Jersey, with the state contemplating a financial transaction tax (FTT) to address government budget deficits. If it moves ahead, the proposed FTT could have a profound effect on hundreds of low latency trading firms and other market participants.

Given the potential impact on bottom lines, it should come as little surprise that firms are beginning to game out scenarios and consider their trading routes. But if they want to be able to move swiftly, it’s important that they have the right partners.

It’s expected that more firms will consider their options, weighing up access to key markets whilst avoiding New Jersey routes.

New Jersey has proposed a $0.0025 FTT on firms that do at least 10,000 trades per year. Such a threshold would mean most HFT firms would be affected. Exchanges have been quick to criticize the move, with NYSE saying it would be ready to leave New Jersey. Other announcements from exchanges went public recently, such as CBOE’s top executive saying pretty much the same as NYSE and NASDAQ PSX operations announcing their return to the Carteret data center on Monday, November 2, 2020. Chicago, home to a large HFT community, is one of the locations that would likely benefit from any New Jersey exodus.

As the exchanges themselves suggest they are ready to uproot quickly, trading firms are having to contemplate the possibility that they too would have to take similar action.

The good news is that IPC’s Connexus Cloud already allows firms to trade Chicago from any location. The service also allows for a super-fast time to market. Given the possibility of major news coming suddenly from either New Jersey officials or the main exchanges, that’s an important factor.

Connexus Cloud is a multi-cloud platform for global capital markets, providing an ecosystem of more than 7,000 participants across 750 cities in more than 60 countries. The ecosystem includes sell-side and buy-side firms, inter-dealer brokers, liquidity venues, energy firms, trade lifecycle providers, and market-data vendors as well as clearing and settlement firms. Furthermore, Connexus Cloud is an unparalleled private, secure cloud solution for the global financial markets. By providing and integrating private and hybrid clouds, and enabling secure access to over 550 public clouds, Connexus Cloud empowers the use of cloud for secure, high-performance data and voice communications, which includes optimized deliveries for market data and trade lifecycle services.

To learn more about Connexus Cloud and what IPC can do for your business, please visit: https://www.ipc.com/support/contact-us/.

The information that is summarized herein does not constitute financial or professional tax advice and is general and speculative in nature.

© 2020 IPC Systems, Inc. All Rights Reserved. The contents of this publication are intended for general information purposes only and should not be construed as legal or regulatory advice.