Liquidity Landscape - Post Covid 19

As lockdown measures are lifted progressively across the globe, Top of Book Liquidity is beginning to reach pre-Covid levels in most markets. However liquidity remains particularly low in Europe and the UK which could be due to the lack of retail flow given the rise in retail activity elsewhere. Spreads are still wider than pre-Covid-levels; Australia Top 200 spreads remain the widest at 40% wider than the January average, followed by the US, Europe and the UK at 37%, 29% and 26% wider respectively, increasing the cost of trading and making the ability to find a natural block critical to improving execution performance. Australia appears to be the most expensive market to trade at 110% more expensive versus the January average, followed by the UK, Europe and the US, which are 59%, 48% and 34% more expensive.

Although it appears that European volumes and market share have now bedded down to a new normal, all eyes are on forthcoming changes that will emerge in Europe via the Special Regulatory Vehicle due under the new German Presidency on July 21st.

Read the report here

The report has been compiled by Rebecca Healey and Charlotte Decuyper of the Liquidnet Global Market Structure team.