Australian-based technology provider GBST Capital Markets has signed up its first investment bank for a financial transaction tax (FTT) processing service as more firms prepare for the introduction of new pan-European levies.
As well as being in talks with several additional banks and custodians, GBST said is also looking to extend the service to enable buy-side users to manage their FTT obligations.
GBST’s Syn~FTT solution is able to manage a bank’s entire FTT processing trade and static data validation to tax calculations, netting and rebate processing. It also highlights exceptions to enable staff to investigate anomalies and ensure they remain on top of their tax payments.
Currently, the system supports both French and Italian FTTs but is prepared to scale up for the introduction of additional transaction taxes proposed across Europe.
“The current goal is to introduce the pan-European FTT at the beginning of 2016,” said GBST CEO, Denis Orrock. “But even if agreement can’t be reached, many of the 11 countries working on the pan-European tax already have legislation in place to introduce national transaction taxes.”
As such, he said firms are looking to prepare systems to cope with a large number of new tax calculations, with many expecting to increase their efforts once more details of the pan-European FTT are released, due in autumn this year.
Though its current system is focused on banks and custodians, GBST said it is currently looking to offer a similar service to asset managers, many of whom are concerned about the potential to fall foul of the new rules.
Orrock added: “Asset managers need to be able to consolidate the information on which taxes are due from their broker dealers and ensure it has been paid. Ultimately the responsibility to pay existing FTTs lies with the end buyer of the security or derivative.”
Initial discussions with the buy-side revealed most are seeking a system that can bring together FTT data from multiple broker systems into a single workflow to enable them to manage all of their obligations.
Despite slow progress on creating a pan-European FTT, the two main instigators of the plan, Germany and France, agreed to continue pushing the project forward in February. A legal challenge to the tax was launched by the UK government in May but was declined on the basis no details of how the tax will be implemented have yet to be agreed. The UK stated it would continue to fight against the tax in the courts.