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European Trading Shifts: Bilateral Dominance Grows
9 Dec
Summary
- Bilateral trading now accounts for 55% of European market activity.
- Goldman Sachs leads as the top Systematic Internalizer provider.
- Lit trading volume has decreased significantly since MiFID II.
European equity markets are experiencing a notable shift towards bilateral trading, which now comprises approximately 55% of total activity. This evolution, spurred by MiFID II, sees Systematic Internalizers (SIs) playing a crucial role in facilitating liquidity. Goldman Sachs has emerged as the leading SI provider, surpassing competitors like JPMorgan and Morgan Stanley.
In contrast to the rise of bilateral trading, lit market execution has seen a contraction, now accounting for around 40% of activity compared to its previous peak. Dark pool trading has maintained a steady presence, holding at approximately 5%. The analysis of non-price-forming trades reveals that even after adjustments, bilateral trading remains a significant element, offering a clearer picture of genuine market interest and liquidity.
Market participants, particularly larger funds, largely embrace bilateral liquidity, with only a small percentage expressing opposition. This sentiment underscores the adaptability of traders in navigating the evolving landscape by leveraging diverse execution mechanisms to optimize their strategies and achieve best execution.
