The MiFID II Liquidity Landscape: Q1 2019

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Alongside the evolving political developments, European markets continue to adjust to liquidity formation post MiFID II.  News that European leaders are now offering the UK a possible delay to Brexit until October 31st may offer relief to the recent decline in overall market volumes, however the reality is the possibility of a hard Brexit is still feasible. 

Further regulatory changes remain on the table in the form of the Investment Firm Review, set to impact the tick size regime for Systematic Internalisers, as well as future guidelines around periodic auctions, potentially further altering liquidity formation in Europe.  Any possibility of a hard Brexit raises the risk of future regulatory divergence between the two jurisdictions, raising questions in relation to dark trading suspensions and Large in Scale trading as well as where liquidity will pool in the event of the Share Trading Obligation being implemented.  Liquidnet takes a look at what this could potentially mean for European liquidity and the wider market eco-structure as the buy-side grapple with delivering best execution in an increasingly fragmented market.

By Rebecca Healey and Charlotte Decuyper, Market Structure + Strategy, EMEA, and Gareth Exton and Joe Fields, Global Execution + Quantitative Services

Victoria Taylor