STA urges the Senate to consider the negative impact of the Modernization of Derivatives Act (MODA 2021). The legislation would require mark-to-market tax treatment for derivatives contracts and require gains and losses be taxed at ordinary income tax rates, which would have harmful impacts on retail investors and degrade overall available liquidity in our markets. Mark-to-market rules would unduly burden taxpayers who hold appreciated stock and enter a related options transaction by requiring such stock to be treated as sold each year despite the taxpayer continuing to hold the stock and not realizing any gain on their investment or in the case of non-dividend paying stock, other taxable income.

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