Hayley McDowell, head of European market structure, RBC Capital Markets
It has been a busy year for market participants and trading venues as key amendments to the Mifid regime were rolled out in the UK and across Europe.
With changes like the introduction of the single volume cap on dark trading, increased pre-trade transparency obligations for systematic internalisers and simplified post-trade reporting requirements, all eyes will be on shifts in liquidity and market structure as the impact of the new regulatory regime should become clearer in 2026.
As policymakers continue to focus on growth and global competitiveness, progress on other market structure initiatives like the UK’s PISCES private market, increased buy-side adoption of ‘bundled’ payments for research, preparations for the transition to T+1 settlement and ongoing consolidated tape efforts, will also take centre stage.
While the benefits of these initiatives are potentially substantial, particularly in the long-term, it will be another busy year for market participants as they navigate the increasingly fragmented regulatory landscape.
Jack Seibald, global co-head of prime services and outsourced trading, Marex
In 2026, we will see shifting portfolio weightings away from the US towards Europe. From an investment perspective, this is currently one of the most significant global trends, and it is likely to continue to dominate in 2026.
US investment portfolios are being refocused on Europe for a variety of reasons – one of which is the enormous run in US equities, particularly in the technology sector, prompting some investors to reassess concentration risk.
Another is the increasing level of capital investment taking place in Europe, including in defence, which is helping to fuel growth. The UK is included here; it represents a very significant part of capital markets and equity markets in Europe. In 2026, we’re likely to see an accelerated growth rate in European GDP and corporate earnings relative to the US.
Secondly, outsourced trading looks set to continue its upward trajectory, with larger firms open to incorporating an outsourced trading solution in some form – not to totally replace existing infrastructure, but to gain cost efficiencies and access to expertise.
Thirdly, we believe we will see the continued expansion in exchange-listed derivative products. The universe of leveraged and inverse ETFs has grown materially, with hundreds of new issuances, and this momentum looks set to carry into 2026. Retail participation remains a dominant demand driver, and capital inflows have been significant. As a result, leveraged ETF turnover represents a meaningful share of secondary-market activity, generating elevated execution flow and commission revenue for brokers with established capabilities in this segment.
Prash Manoharan, head of execution consulting and market structure at Liquidnet
In Europe, investor sentiment is fragile as the exuberance that fuelled the global boom in AI stocks cools. While indices continue to track upward, all eyes are on headlines and data, as investors monitor for signs of weakness that could trigger a step change in trading behaviour.
As a result of the uncertainty, touch sizes in the UK, France and Germany have shrunk, causing trading costs to increase. Meanwhile, spreads are also widening significantly – up around 10% over the past month in France and as much as 20% in Germany. While there is opportunity, the cost of capitalising on it is significant and market impact is high. Export-heavy sectors are therefore feeling the strain, while domestic-focused markets like German and UK small cap equities appear more aligned with underlying economic conditions.
While investors wait for an inflection point that could trigger a correction, trading conditions will likely remain challenging.