Interestingly Sweden tried a 0.5% tax in 1984:

> During the first week of the tax, the volume of bond trading fell by 85%, even though the tax rate on five-year bonds was only 0.003%. The volume of futures trading fell by 98% and the options trading market disappeared.

Needless to say, 'tax avoidance' became the norm (especially since it was exceedingly easy to circumvent) and it was later repealed in 1991.

[1] http://en.wikipedia.org/wiki/Swedish_financial_transaction_t...

law of unintended consequences

In today's deficit boogeyman environment I can't say that extra revenue isn't a consideration, but really the tax was to attempt to stem a runaway financial system that has become the blood-sucking vampire squid[1] that's taking more and more of the wealth while providing little of value to the country.

[1] http://www.guardian.co.uk/business/andrew-clark-on-america/2...

Like the article points out, the inefficiencies of the market are being removed exactly because of these so called "vampire squid". Maybe we should call them "cleaner shrimp" instead, since they're performing a useful function?

Don't get me wrong, I tried my hand at some day trading a couple of years back and the HFTs helped to make it hard going. That was the problem with the business model I wanted to pursue at the time, though, not with the market itself.