Posted by Christian Voigt on Tuesday, October 2, 2018 · Leave a Comment
When the double volume cap (DVC) was first enacted on 12th March it cut nearly half of dark turnover in Europe. After a 6-month mandatory break all of the suspended stocks have now been allowed to re-join the general population. Early evidence suggests that overall dark trading has now resumed at roughly pre-suspension levels.
Our Top of the Blocks report shows that this resumption is not down to block trades, suggesting that there is a preference for trading these newly released stocks in the dark below the Large in Scale threshold. Whether – and when – they breach the 4% and 8% caps again is anyone’s guess. For the next couple of months ESMA will be kind to them because of the way the thresholds are calculated, with the 12-month moving average including the suspension period. But what happens once this grace period is over? With investors apparently reverting to their previous trading behaviour, is the DVC simply serving to narrow the window of time in which they can get their preferred smaller dark trades done before the next suspensions kick in?
