STA opposes FTTs because they are paid by the end investor and result in higher trading costs due to wider spreads, decreased liquidity, increased price volatility, or lower performance on investment vehicles due to reduced trading volume. While most FTT proposals appear on the surface to have low rates, they add up to significant costs for individual investors, especially over time. These costs can be even more significant to retail investors when the tax can be applied multiple times in their portfolio, including but not limited to the purchase of mutual funds, the mutual fund’s purchase of individual stocks and bonds, the mutual fund rebalancing its funds, and individual investors rebalancing their portfolios. This same impact would be felt by pension funds, reducing returns for beneficiaries.

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