'Tobin tax' would cause radical remodelling of UK fund industry

The UK fund management industry faces complete transformation if the financial transaction tax - or Tobin tax - is implemented, commentators have warned.

Money market funds, short duration fixed income funds and government liquidity funds would be most exposed to the damaging impacts of the tax, with experts saying such strategies would be “untenable”. The tax could also prompt a move away from active towards passive strategies which will be less affected by the new regime. “Money market funds, which employ daily trades, will be immediately affected,” said Jorge Morley-Smith, head of tax at the Investment Management Association (IMA). “People will quickly realise they will become unfeasible, along with funds that deal in derivatives...