THETRADETECH DAILY THE OFFICIAL NEWSPAPER OF TRADETECH 2026
Europe increasingly becoming a patchwork of auctions and offexchange trading
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The impact of the SVC shift 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 the same year.
Despite this decline, displaced flow does not appear to be moving onto the exchange order book, but is instead being routed to periodic 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.
Speaking at a recent closed market structure roundtable, Hayley McDowell, head of European market structure at RBC, said:“ There has been a notable shift from dark trading into periodic auction venues since the implementation of the new cap. Periodic auctions appear to be absorbing some of the liquidity previously seen in the dark.”
McDowell also went further to indicate that though the SVC only came into effect very recently, on 14 October 2025, the full impact on liquidity is still being assessed, although the potential impact is somewhat visible.
She added:“ Early indications suggest that more instruments than expected may be affected. The new SVC limits dark trading to 7 % of total aggregated EU trading volume, replacing the previous DVC which restricted dark trading to 4 % per venue and 8 % marketwide. Under the SVC, stocks that breach the cap will be suspended from dark trading for three months, compared to six months under the former DVC regime.”
Similar sentiment was shared by Mark Montgomery, chief commercial officer at xyt, who emphasised the changes in liquidity noted across the European market structure landscape.
Speaking to The TRADE in January, he 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 European Securities and Markets Authority( ESMA) unveiled its final plans for the region in April 2025, with plans aimed at boosting the resiliency of the markets, improving transparency, and simplifying reporting.
The final report followed the Mifir and Mifid II revisions published in the EU’ s official journal in March 2024.
As part of the shift, ESMA confirmed that its volume cap mechanism( VCM) calculations will make use of transaction data collected by national competent authorities, while the DVC reporting system previously used was decommissioned in January 2026, making way for the new regime and reduce reporting burden of entities.
A lens on price discovery and formation 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.”
Despite this, a recent joint paper published by AFME and the European Fund and Asset
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