Virtu CEO blasts New York's proposed stock transfer tax as 'foolish'

Virtu Financial Inc. CEO Doug Cifu is threatening a move out of New York if state lawmakers in Albany move forward with a proposed stock-transfer tax.

Cifu, who runs one of Wall Street's fastest and largest trading shops, blasted the proposal in the New York Statehouse as "foolish" while speaking to analysts Feb. 11, warning that Virtu would end up moving out of New York if it was enacted. His comments come just two days after Stacey Cunningham, the president of the Intercontinental Exchange Inc.-owned New York Stock Exchange, made a similar argument in the opinion pages of The Wall Street Journal that the Big Board would have to consider a move should the tax be imposed.

"The market makers and the big banks aren't going to pay the transaction tax. It's just going to get pushed back to the pensioners," Cifu said during Virtu's quarterly earnings call. "Are there adjustments that need to be made to the markets? Of course. But ultimately, slowing down the market and taxing it and forcing those of us to flee to other jurisdictions and moving liquidity outside the United States to Europe or to some other jurisdiction is really in nobody's best interest."

In a Feb. 11 letter to New York Gov. Andrew Cuomo, State Sen. James Sanders Jr., a Democrat from Queens, and Assemblymember Phil Steck, another Democrat whose district surrounds Albany, wrote that the argument against the stock transfer tax that Wall Street could leave New York is unfounded and urged him to reject the criticisms of the proposal that the financial industry has levied against it.

"This is nothing more than the voices of the Ronald Reagan no-tax-is-a-good-tax-crowd," Steck said in a statement. "These institutions pushed back against the Stock Transfer Tax when it was first adopted in 1905. They were proven wrong then, and they will be proven wrong now."

A spokesperson for Sanders' office declined to comment further.

Wall Street giants like Virtu, NYSE and others have had to ramp up their efforts over the past six months to fight various proposed trading taxes around the country, with the other notable example coming in New Jersey.

The New Jersey legislation, which has since been said to be on the backburner, encouraged the financial heavyweights to begin discussions with other states like Texas, Florida and Illinois about relocating their data centers that currently reside in the Garden State. Politicians in the other states have continued to try and court the financial industry in the months since. Miami Mayor Francis Suarez tweeted at Cunningham on Feb. 10, writing that he "would love for you to take your talents to Miami." And Texas Gov. Greg Abbott recently recommended in a proposed budget that the state's legislature should ban transaction taxes through a constitutional amendment.

Virtu recently made public its plans to move 30 of its about 1,000 employees to Palm Beach Gardens in Florida.

Both Cifu and Cunningham acknowledged the strain that the COVID-19 pandemic has put on states across the country and the subsequent interest that has followed in taxing the financial industry to come up with new streams of revenue.

"The NYSE understands what COVID-19 has done to New York," Cunningham wrote. "We all want the city and state to emerge from the pandemic stronger than ever. That's why we oppose the return of the stock-transfer tax. The last thing we want to do is leave a place we love, especially because of a flawed policy."