The U.S. Treasury's 2010 revenue proposal, released Monday, included a bombshell for the futures and options industry: the possibility of the end of preferential 60/40 tax treatment for futures and options. Under the 60/40 rule, enacted 25 years ago, for U.S. futures contracts 60% of gains are considered long-term gains, taxed up to 15%, and the remaining 40% of gains are considered short-term gains, taxed up to 35%. The Treasury's proposal would eliminate 60/40 treatment.
The Chicago Board Options Exchange (CBOE) issued a member advisory on the dangers of the proposal for options market makers. CBOE says the proposal has "unintended but harmful consequences," including the passing on of options market makers' cost of doing business to end users and wider spreads and increased transaction costs, which would result in a less liquid marketplace.
This is no doubt a huge story for futures and options traders, and we'll be capturing all of the reaction from our industry experts and sharing the latest developments on the blog and at futuresmag.com. What's your reaction? How will this affect your trading? Join the discussion by leaving a comment below.
