•  The possible distortion will be largest on the shortest maturities in the secured money markets, i.e. repo market (given FTT does not take into account maturity). •  Reduced liquidity in secondary fixed income markets (including government bonds) which may hamper smooth monetary policy transmission and worsen market fragmentation at a time when many of these markets remain fragile.
For these reasons a careful impact assessment warranted in these respects and some modifications in the current proposals merit consideration. Some decades back, long before the financial crisis, James Tobin gave us four definitions of financial market (in)efficiency (in his Fred Hirsch Memorial lecture 1984)2: 1.  information arbitrage efficiency – accepted by Tobin in its weak form.