A “Smart” Version of the FTT
Summary
Derivative contracts can rationally be classified – prospectively, from the perspective of the economy as a whole — as either functional or very likely to be dysfunctional, although “the Street” pretends otherwise. Therefore a charge levied at the writing or exchange of very-likely-to-be-dysfunctional derivative contracts would usefully inhibit dysfunctional trading without throwing the “good functional derivative babies out with the dirty bath water of dysfunctional derivatives”. Financial instability would be lessened and coherence between financial and real sectors would grow again. This paper, by a coach to a manager of trading at a major international bank, explains how derivative transactions can be classified: either likely to be functional or very likely to be dysfunctional for the economy as a whole. It then sketches how such a charge might be calibrated in practice to bring about critical financial reform objectives.
Angus Cunningham, Principal, Authentix Coaches
Authentix Coaches was founded by Angus Cunningham to make available the learnings from his career as an engineer, corporate executive, management consultant, entrepreneur, writer, and leadership and corporate insight development coach. Over the last 17 years Angus has been articulating the Authentix coaching principles, drawing on a lifetime’s experiences in persistent devotion to truth and vitality in words.