The U.S. Securities and Exchange Commission is closely watching a plan being considered by U.S. stock exchanges to move their main electronic trading systems from New Jersey if the state levies a trading tax, an agency official said on Wednesday.
Such an exit from New Jersey, where three main data centers process billions of dollars of trades for all 16 U.S. stock exchanges, could have benefits, but could also be very costly and disruptive to market participants, said Brett Redfearn, the SEC’s director of trading and markets.
“We are going to continue to talk to stakeholders about this, but needless to say, we certainly do have concerns,” he said at a Security Traders Association (STA) conference.
New Jersey, facing a coronavirus-related fiscal shortfall, is considering taxing firms that make more than 10,000 financial transactions per year a quarter of a penny for each transaction.
Intercontinental Exchange Inc’s ICE.N New York Stock Exchange unit ran one of its exchanges from its Chicago backup site last week, in part to show its readiness to quickly leave New Jersey if the tax is levied.
Nasdaq Inc NDAQ.O also plans to run one of its exchanges from Chicago for a week later this month.
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