Eliminate taxes on trading, listings to encourage investments and investor participation, says World Federation of Exchanges

Capital markets are essential to economic growth, innovation, and job creation but poorly designed tax regimes can deter participation and undermine the broader benefits of capital markets, said World Federation of Exchanges (WFE) while suggesting that countries should look at global tax reforms to unlock investment and power economic growth.

The World Federation of Exchanges or WFE is the global industry association for exchanges and clearing corporations. In a latest paper published, the global body has outlined policy recommendations aimed at fostering investment, enhancing capital formation, and supporting economic development.

“The paper outlines a comprehensive blueprint for modernising tax policy to encourage productive investment, support long-term savings, and enhance global competitiveness. It calls on governments to eliminate harmful levies, simplify reporting requirements, and create a more welcoming environment for investors and issuers alike,” stated the WFE paper.

“A well-calibrated tax system should reduce barriers to market access, incentivise productive investment, and simplify compliance for both issuers and investors,” it added.

Some of the key recommendations of WFE – the Indian exchanges are also part of the global association – include eliminating taxes on financial transactions, providing tax relief to investors, and removing taxes on listing of companies while simplifying tax reporting and removing cross-border tax barriers.

“FTTs (Financial Transaction Taxes) increase trading costs, reduce liquidity, and deter both investment and issuance. Evidence shows they harm market efficiency and ultimately fail to achieve their intended policy outcomes,” stated the WFE paper.

“Tax incentives for pension savings and retail investment accounts, as well as reducing withholding taxes on dividends, can boost long-term savings, support equity investment, and promote financial inclusion,” it added.

“Capital markets are engines of innovation, job creation, and prosperity, but poorly designed tax regimes are holding them back. We are calling on governments to take bold, coordinated action to remove these barriers to unlock the potential of global markets,” stated the paper while quoting WFE CEO Nandini Sukumar.

In a similar context, Richard Metcalfe, Head of Regulatory Affairs at the WFE, said that an excessive tax burden is a major factor behind the decline in public listings. “We’ve consistently urged regulators to act decisively to reverse this trend. Reforming outdated and counterproductive tax systems is an effective way policymakers can encourage companies to list and foster a vibrant, risk-reward investment culture,” he was quoted as saying in the paper.

Interestingly, at a time when India is among the top countries in terms of the number of new listings – cumulative of main board and SME – the WFE has suggested that countries should remove taxes on listings.

“Removing levies on public listings makes it more affordable for companies — especially SMEs — to access public markets. Further, tax incentives for first-time listings and deductions for listing and IPO-related expenses can stimulate new issuance and capital raising,” stated the WFE paper.

Data from Prime Database shows that there have been a total of 163 – 125 SME IPOs and 37 main board — new listings in India in 2025 till July, raising a cumulative amount of over Rs 68,000 crore.

Meanwhile, the WFE has also suggested simplifying tax reporting as it believes that complex and inconsistent tax requirements discourage investment, particularly cross-border. “Automation, clear guidance, and exemptions for small investors can reduce compliance burdens and expand participation,” it stated.

It has also called for removing cross-border tax barriers, saying that harmonising reporting requirements, strengthening double taxation treaties, and aligning treatment of domestic and foreign investors can boost global investment flows, particularly to emerging markets.

“By adopting these measures, policymakers can create an investment-friendly tax environment that strengthens capital markets, supports sustainable growth, and enhances international competitiveness,” stated the WFE paper.

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