Liquidity Landscape (US edition) – Q2 2026 market structure outlook
The Q2 2026 US Liquidity Landscape report analyses a market that remains resilient yet carries underlying structural complexities. Trading has shifted back towards lit venues, off-exchange behaviour is shifting, and macro uncertainty continues to make execution conditions challenging for institutional investors.
The market continues to climb, but the foundations beneath are shifting
The S&P 500 has rallied 17% over six weeks, with the market on track for a fourth consecutive year of double-digit gains, something that has happened only three times before, most recently during the Dot-Com Bubble. Equal-weighted indices having climbed to all-time highs and small caps are beginning to take the lead. Despite this market resilience, underlying trading conditions are complex. Bid-offer spreads remain elevated, April’s average depth of book fell 32% compared with January 2025, and macro data linked to oil prices, the Iran conflict, and central bank policy continue to fuel uncertainty influencing institutional volume flows.
What makes this quarter interesting?
In 2025 off-exchange volumes outpaced exchange volumes in all but three months. That trend has now reversed in 2026, with activity moving back towards lit venues. OTC volume has fallen to 34% of the market, down from 38% in 2025, while ATS volumes have risen to 14% of the US market, up from 12% last year. OTC venues hit a record low of 268 shares per trade in February, and the TRF recorded an all-time low of 156.6 shares per trade in April. Non-bank ATSs, led by firms such as IntelligentCross, moved ahead of bank-operated venues for the first time.
ETF volumes reached historic levels, hitting 29% of total market volume in March, the highest percentage on record. Yet the closing auction, historically the dominant liquidity event for institutional traders, has not kept pace. Despite close volumes hitting a five-year high in absolute terms, the auction accounted for just 6.6% of total US volumes in March. After-hours trading, by contrast, rose nearly 70% between 2024 and 2025 and now regularly accounts for more than 10% of total market trading.
Why this matters now
A number of structural themes are emerging at the same time. The Order Protection Rule remains in flux, with the November 2026 deadline for the implementation of tick size and access fee rule changes now also in question. Tokenisation of equities is moving from idea to reality. Prediction markets are drawing institutional participation and attracting growing regulatory scrutiny in equal measure. SEC proposals to change corporate earnings reporting from quarterly to semi-annual are progressing. All carry direct implications for how liquidity forms and what execution looks like for institutional investors in the quarters ahead.
Traders with access to both block and electronic liquidity, and the flexibility to adapt across venue types and trading sessions, are likely to be best positioned.
Other notable trends:
Short interest has risen alongside record-high stock prices, supporting increased volatility and creating conditions for potential short squeezes
The SPY averaged over $55 billion traded per day in the first four months of 2026, up 148% over four years, and has become a primary instrument for institutional hedging and macro exposure
Penny stocks hit three-year lows in Q1, with stocks priced between $0 and $1 falling to just 9.3% of total trading in February, consistent with declining retail participation in OTC volumes
Please refer to the full report for sources.
Written by Jeffrey O’Connor, US Head of Market Structure and Sell Side ATS Strategy, and Andrew Carson, US Market Structure and Liquidity
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