Despite an overall 6% decrease year-on-year, the average daily equity trading on European main markets and multilateral trading facilities (MTF) for Q1 bounced back by 14% quarter on quarter, according to the Association for Financial Markets in Europe’s (AFME) latest report.
Addressing the current state of play across secondary markets, AFME highlighted that data trends demonstrated a deterioration in market liquidity as measured by turnover ratio – “calculated as annualised turnover value relative to market capitalisation”.
Following a record low of 100% turnover ratio observed in H2 2023, the turnover ratio increased to 110% in Q1 2024, according to the ‘equity primary markets and trading’ report.
In addition, AFME also highlighted that on-venue trading accounted for the majority of total addressable liquidity in the equity space for the first quarter of 2024, as indicated by recent big xyt data.
Specifically, on-venue trading represented 74% of the total addressable liquidity, while volume traded off-venues, on systematic internalisers and pure OTC, made up the remaining 26%.
“The proportion of on-venue trading has fluctuated at around 70% relative total addressable liquidity since our records start in 2018,” added AFME.
Elsewhere, in addressing the equity trading market structure, the report highlighted the relevance of double-volume caps (DVC) and the fact that the number of instruments suspended under the DVC has experienced a decline over the last 12 months.
Read more: AFME calls on regulators to remove caps on block trading
Specifically, there were 232 suspended instruments as of March 2024. AFME however confirmed that these 232 instruments currently suspended under the DVC at the EU or trading venue level “represent 0.8% of the equity-like instruments on ESMA’s July 2023 DVC files (27,859) [and] 174 of the 232 suspended instruments have EU ISINs.”