With European regulation on dark trading beginning to tighten, markets across the continent appear to increasingly becoming a diverse landscape made up of auctions and off-exchange trading.
A recent report released by the Association for Financial Markets in Europe (AFME) highlighted data from xyt which revealed that the lit order book made up 27% of addressable trading in Q4 2025, with other mechanisms spanning auctions, systematic internalisers (SIs) and OTC transactions making up most of the rest of the activity.
Despite this, AFME also emphasised that volumes on lit venues have, however, remained largely stable between 2017 and 2025, alongside a sustained increases in equity volumes, from €17.59 trillion in 2024, to €22.24 trillion in 2025.
To explain its findings, the study pointed towards the EU’s transition from the double volume cap (DVC) regime to the single volume cap (SVC) for dark trading, as part of an effort to simplify frameworks and enhance transparency and consistency across European markets.
Building on this, the report revealed that early data has indicated that the shift has had a significant impact on the proportion of dark trading across Europe, with the number of instruments suspended at the EU level under the SVC declining by 39% over a two-month period – from 355 in October 2025, to 217 by the end of December.
Despite this decline, displaced flow does not appear to be moving onto the exchange order book, but is instead being routed to period auctions, which saw a market share increase of 1.3% following the SVC shift, indicating that institutional investors are prioritising reducing information leakage during large order execution.
Read more – More instruments than expected could potentially be affected by new SVC in EU
Speaking to The TRADE about the findings, Mark Montgomery, chief commercial officer at xyt, said: “What you’re seeing is liquidity changing shape, as opposed to disappearing.
“When the rules constrain one channel, the market adapts quickly and reroutes flow to mechanisms that still allow institutional investors to trade size efficiently.”
The report has also awakened fresh questions around intraday price discovery and where price formation really takes place across European markets.
Specifically, AFME’s figures reveal that the average block trade size in Q4 2025 was approximately €3.5 million, indicating that institutional trading still dominates, with most activity stemming from large investors moving big sums rather than smaller retail trades.
For Rob Cranston, head of equity business development sales strategy at SIX Exchange, a shift towards alternative liquidity sources may be a cause of concern, as prices won’t reflect supply and demand as accurately during the trading day.
Speaking to The TRADE, he commented: “Intraday price discovery will be weaker over the long term if too much activity migrates away from continuous trading.”
To combat this, Cranston also indicated that there should be incentives to encourage institutional investors to trade on the lit order book, adding: “If the objective is healthier daytime price discovery, driving better institutional visibility of European liquidity, we must positively encourage displayed price and size by designing mechanisms that make joining the lit book as attractive as possible.”