NYSE ready to leave N.J. if state imposes tax on stock trades, report says

Posted Sep 11, 2020

The New York Stock Exchange is reportedly taking a step to prepare moving its data center out of New Jersey should state leaders install a proposed tax on financial transactions such as stock trades — a tax Gov. Phil Murphy said he favors but has not included in his latest state budget proposal.

Most major U.S. stock exchanges operate their electronic trading systems in New Jersey. And the NYSE is part of a new coalition of exchanges and trading firms fighting the tax proposal and threatening to move their data centers away from the Garden State if the tax is enacted.

In a move signaling it’s prepping to leave, the NYSE will announce it will run one of its exchanges from a backup site in Chicago as a precursor to leaving the Garden State, according to an internal memo obtained and reported by the Wall Street Journal on Friday.

The proposal in question is a bill that would impose a quarter-of-a-cent tax on stocks options, futures, and swaps trading via electronic data centers in North Jersey.

State Assemblyman John McKeon, D-Essex, a sponsor, told Bloomberg News on Wednesday that the state could collect $10 billion a year from entities engaged in at least 10,000 transactions per year.

Gov. Phil Murphy said late last month he was “very seriously” considering the measure. But he has not included it in the revised state budget proposal he introduced last month that must be enacted by Oct. 1.

Asked about the NYSE’s threat Friday, Murphy said he was disturbed the memo leaked out on the anniversary of the Sept. 11 terrorist attacks.

“I want to be mindful of the sacred nature of today,” the Democratic governor said during his latest coronavirus briefing in Trenton. “I’m not sure I would have put that out there at 9 o’clock in the morning on 9/11, given the devastation that the financial sector suffered on 9/11, 19 years ago.”

Murphy, a former banking executive at Wall Street firm Goldman Sachs, added that he likes “the concept" of the bill.

“I do believe personally there is enormous value to them for proximity,” he said. “We’ve begun a dialogue with the operators, and we hope we can have peaceful and constructive dialogue.”

He also suggested the tax could be helpful as the state deals with massive tax revenue losses amid the coronavirus pandemic.

“We feel pretty strongly about this: We just can’t score it in the budget because it’s got too much uncertainty to it,” Murphy said. “But I like conceptually the idea.”

“It’s not a forever thing,” the governor added. “This is a moment unlike any other. … The notion we could all come together and say, ‘We don’t love this idea, but we’re prepared to give a little bit of blood to help us all get through this together for the next couple of years.’ I think that’s reasonable.”

McKeon, the lawmaker sponsoring the bill, stood by his plan Friday, saying the stock exchanges are an asset to New Jersey and should face taxes similar to the fees Texas and Oklahoma place on oil companies.

He also said he “wouldn’t 100% rule out” the tax being included in the upcoming state budget, noting that it could be negotiated as part of a deal.

“I don’t think we should feel threatened by that particular industry,” McKeon told NJ Advance Media. “In my opinion, they need us. They can run but they can’t hide.”

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