The World Federation of Exchanges (WFE), the global industry association for exchanges and clearing houses, has published a new paper urging governments to adopt future-ready tax systems that incentivise investment and support long-term economic growth.
The paper provides a detailed blueprint for modernising tax policy to encourage productive investment, strengthen savings, and enhance global competitiveness. It argues that poorly designed tax regimes continue to weigh down capital markets, deterring both companies and investors, and undermining broader economic development.
Among its key recommendations, the WFE calls for tax relief measures to encourage greater participation in capital markets. It highlights tax incentives for pension savings and retail investment accounts, as well as reductions in withholding taxes on dividends, as tools to support long-term savings, boost equity investments, and promote financial inclusion.
The report also urges governments to eliminate taxes on public listings, which it argues make it more costly for companies, particularly small and medium-sized enterprises (SMEs), to raise capital on public markets. Incentives for first-time listings and deductions for IPO-related expenses are identified as ways to stimulate new issuance and expand opportunities for growth-oriented businesses.
On clearing activities, the WFE raises concern over jurisdictions that impose taxes on clearing transactions. It stresses that such levies undermine financial stability by discouraging the use of central clearing, a globally recognised risk mitigation mechanism. Ensuring tax neutrality between cleared and non-cleared trades, the paper argues, would help foster safer and more efficient markets.
The paper also calls for simplified tax reporting processes, especially in cross-border investment. Complex and inconsistent requirements often discourage investors and create barriers to participation. The WFE recommends greater automation, clear guidance, and exemptions for smaller investors as measures that can reduce compliance costs and attract broader involvement.
Additionally, the organisation advocates for the removal of cross-border tax barriers through the harmonisation of reporting requirements, stronger double taxation treaties, and aligned treatment of domestic and foreign investors. Such reforms, it notes, would boost global investment flows, particularly into emerging markets.
On financial transaction taxes (FTTs), the WFE takes a firm stance against them, arguing that they increase trading costs, reduce liquidity, and ultimately deter both investment and issuance. The paper contends that such taxes harm market efficiency and fail to deliver the policy benefits they are intended to achieve.
Commenting on the paper, Nandini Sukumar, CEO of the WFE, stressed the urgency of reforms. “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. The reforms we suggest will help channel more capital into the real economy, supporting business expansion and infrastructure investment, while making markets more inclusive and accessible. By reducing friction and incentivising participation, we can help capital markets better serve society,” she said.
Richard Metcalfe, Head of Regulatory Affairs at the WFE, echoed these concerns, noting the direct impact on listings. “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 added.
The WFE’s proposals come at a time when global markets are facing heightened challenges in attracting listings, expanding investor participation, and financing economic recovery. If implemented, the recommendations could represent a major shift in how governments design tax systems to balance revenue generation with long-term growth and competitiveness.
