Liquidity Landscape: Q3 2026 US
The Q3 2026 Liquidity Landscape report examines a market defined by contradiction: record trading volumes alongside deteriorating liquidity. Institutions are facing thinner displayed depth, wider spreads, shrinking trade sizes, and growing execution complexity.
Record volumes mask weaker liquidity
Trading activity remained elevated throughout Q3, with average consolidated volume reaching 19.1 billion shares year-to-date, up nearly 60% from 2024 levels. However, increased trading activity has not translated into improved liquidity. Displayed depth in the U.S. Top 500 declined to its lowest level of the year, while bid-offer spreads remained elevated, making it increasingly difficult for institutional investors to transact large positions efficiently.
Market structure reform takes center stage
The proposed full rescission of SEC Rule 611 (the Order Protection Rule) emerged as one of the most consequential regulatory topics of the quarter. While many market participants support efforts to address market fragmentation and exchange complexity, concerns are growing about the unintended consequences of removing protections that underpin the National Best Bid and Offer (NBBO).
Industry debate has increasingly focused on whether a partial reform, rather than a full rescind, could better preserve market integrity while addressing longstanding concerns around exchange proliferation, connectivity costs, and market data fees. The outcome could have significant implications for Best Execution standards, liquidity sourcing, and the future structure of U.S. equity markets.
Why this matters now
A combination of regulatory uncertainty, elevated volatility, persistent macroeconomic concerns, and geopolitical events are creating a challenging environment for institutional investors. With inflation data, Federal Reserve decisions, and the U.S. midterm elections approaching, market participants should expect continued volatility, fragmentation, and liquidity variability through the remainder of the year.
Other notable trends:
Execution strategies will need to adapt to a changing liquidity landscape. The rise of non-bank market makers, growing off-hour activity, compressed trade sizes, and ongoing macro uncertainty are reshaping how institutions access liquidity and navigate risk.
Off-hours trading reached record levels, with pre- and post-market activity accounting for 14.5% of June volume, driven largely by increased participation during the pre-market session.
The Trade Reporting Facility (TRF) exceeded 50% of U.S. market volume in July, underscoring the continued shift toward off-exchange trading and alternative liquidity venues.
Please refer to the full report for sources.
Jeffrey O’Connor US Head of Market Structure and Sell Side ATS Strategy, Andrew Carson US Market Structure and Liquidity Analytics