Coming off the back of recent market volatility, particularly noted since the US’ April tariffs and levy changes, risk management has emerged as the main pain point for many European equities traders, according to a recent Bloomberg Intelligence report.
More than half (55%) of the traders surveyed predict volatility to persist for one to three years, leading to a shift in priorities for institutional desks.
Addressing the current state of play, 39% of traders at large funds cited risk management, spanning real-time portfolio adjustments, hedging, timing trades and managing exposure, as the most significant challenge they face.
When it came to small firms, 45% agreed that this is their biggest obstacle, while medium-sized funds were more evenly divided on what was the greatest challenge, differing between risk, liquidity, and procedural and operational hurdles.
As highlighted by the report, the recent bouts of market turbulence is a key driver behind this consensus – such as intraday swings and price fluctuations. Bloomberg estimated that the volatility would continue throughout the remainder of Trump’s administration as ‘the new normal’.
This was reiterated by an economic bulletin forecast produced by the European Central Bank in September, which confirmed that the trade tariffs and economic fluctuations experienced in the first half of 2025 would continue to impact the second half of the year, producing further volatility and impacting the European market.
Liquidity no longer a primary concern
In contrast to previous periods of market volatility, during the most recent turbulence, liquidity was not viewed as a key challenge, with 91% of the traders surveyed at large funds stating that liquidity was not a primary concern.
Instead, the greater challenge related to this lay with accessing the right sources of liquidity and timing trades precisely in line with each desk’s investment philosophy.
Read more – Buy-side traders expect tariff-led volatility to drive European equities investment, report finds
Despite this, only 9% of large funds and 18% of medium funds encountered issues accessing liquidity during this period, while no small fund surveyed experienced these problems.
These findings draw a sharp contrast to previous years, most notably the COVID-19 pandemic, where volatility contributed to a sharp decline in liquidity, indicating a shift in European market infrastructure and resilience, and traders’ priorities.
Read more – The pandemic has shaped a new normal in the trading space
Bloomberg’s ‘European institutional equity trading study 2025’ report was conducted between April 2025 to June 2025, surveying 103 European head and senior buy-side traders from firms managing more than £25 trillion in assets.