It has long been accepted that the 1 January 2014 commencement date is not realistic. However the Commission are of the view that if political agreement is found before the end of 2013 the FTT could still enter into force towards the middle of 2014. In our view this depends on the future shape of the FTT regime. If political agreement settles around a narrow-based FTT (perhaps only applying to equities, at least initially) then mid-2014 is just about feasible. If there is agreement around a wider inclusion of derivatives and debt securities then, the early implementation still seems optimistic.
In terms of process, technical discussions will continue over the summer but it seems likely that little will emerge about potential modifications to the scope of the FTT until after the German elections in September. The question will then be what sort of political support there will be from Germany, whether there is appetite to introduce anything more ambitious than a French or Italian-style FTT, and whether hoped for exemptions for market makers, pension funds, repos and government debt will be included.
For more information please see our FTT blog or contact Sarah Lane or Andrew Seagren