Dark trading booms in 2013 as European markets recover

Dark trading volumes on multilateral trading facilities increased by over 40% last year amid a broader recovery for European markets.

Dark trading volumes on multilateral trading facilities (MTFs) increased by over 40% last year amid a broader recovery for European markets.

Total value traded on European exchanges reached €8.46 trillion in 2013, up 5.1% compared to 2012, according to figures from Thomson Reuters Equity Market Share Reporter.

But it was dark trading that saw particularly strong growth, climbing from €318.4 billion in 2012 to €449.8 billion last year, an increase of 41.2% and dark trading on MTFs now accounts for 5.3% of total market activity.

The rapid growth in dark trading on MTFs adds weight to claims from TABB Group that European dark activity has already breached the 8% cap currently being proposed by European legislators once broker crossing networks are included in the tally.

Despite the improvement in trading volumes seen last year, 2012 was a particularly difficult year for European markets with record low trading volumes and total value traded was still lower than in 2011, which saw volume hit €10.09 trillion. Dark trading has bucked the trend however, and has now almost doubled from the €276.6 billion traded in 2011.

Trading volumes in December 2013 were down 10.7% to €606.7 billion compared to the previous month, though this is in line with seasonal trends.

The overall 2013 recovery in trading volumes has been met with similarly strong performance of key indices, including the FTSE 100, Dow Jones Industrial Average and S&P 500 all seeing strong performance as the global economy began to improve following the financial crisis of 2008. The CAC 40 reached its highest levels since September 2008 during 2013 and the DAX index reached an all-time high in December.

The Dow Jones reached all time close and intraday highs on 31 December 2013, as did the S&P 500. The FTSE 100 achieved a 13-year high in May last year.

BATS Chi-X Europe remained the largest European exchange by turnover with market share of 20.07% in December 2013, though this is down from 22.32% seen in the same period of 2012.

BATS was followed by Deutsche Borse, which saw market share of 12.52% for its Xetra trading platform and the London Stock Exchange, accounting for 11.53% of total European volume.  Both exchanges also saw their market share fall slightly since 2012, down from 12.81% and 12.54% respectively.

Despite the problems faced by Southern European economies during the euro-zone crisis, the Spanish market was able to make a particularly strong recovery in 2013 after a ban on short selling was lifted early in the year.

The number of shares traded on the country’s primary exchange, BME, reached a total of 48.6 million, up 19.7% compared to 2012. However, this was not matched by the cash value of equity trades, which grew just 0.67% to €703.6 billion.