Liquidity Landscape: Changes, they are a-coming

European markets accelerated higher during the first quarter, with many indices achieving record highs at the end of March. The prospect of a hard landing has turned toward a soft landing with whispers even of no landing at all. Coupled with continued exuberance around artificial intelligence, markets have responded with vigour and liquidity increased alongside rising markets during the quarter. While most relative growth is still occurring outside lit continuous trading, the multi-year decline in the market share of the lit primary post-MiFID II appears to have plateaued, consolidating above a floor of around 30%. With investor conviction robust, dark volumes also grew with the Large-in-Scale market experiencing growth: 86 prints over $20M were recorded during the first quarter, more than double the quarterly average in 2023. Periodic auctions continued their steady growth, as market participants appear to increasingly value the format as an important piece of the market structure. The market share of periodic auctions as a percent of overall lit activity peaked at 7.2% in February. As expected, and in line with their historic seasonality, after a quiet January and February, SI market share increased over 75% from February into March—now at 22% of the market.

Gareth Exton Head of Execution + Quantitative Services EMEA, and Conor Diviney, Execution consultant, in partnership with Rebecca Healey, Redlap Consulting