Please find attached Liquidnet’s H1 2020 Liquidity Landscape report which analyses the liquidity landscape post Covid-19.
Key findings include:
- Top of Book Liquidity has not yet returned to pre-Covid levels bar Hong Kong All. Whereas US Top 500, Australia and Japan are almost back to pre-Covid levels, the UK Top 100 and EU STOXX 600 remain significantly lower.
- One potential reason for the low liquidity levels in the UK/ Europe compared to the US and APAC may be due to the high proportion of retail activity which is taking place in these jurisdictions. In the US, the increase in retail trading has helped trigger a surge in options trading with the total value of contracts now at $5.2tn, roughly double the level seen five years ago. Online brokerages have become particularly attractive during lockdown, attracting widespread regulatory concern as to the impact on retail investors from ASIC to the SEC.
- Global volumes are up to 84% higher than January averages, however they remain around 60% less than the peak in March. In line with Liquidity patterns, spreads are still wider than pre-Covid levels, despite being considerably tighter than they were back in March. As a result, the cost to trade is still considerably higher than it was pre-Covid.
Please also find attached Liquidnet’s latest report on unbundling titled Rebundling Unbundling which analyses the proposal by the EU Commission to revisit MiFID II rules on unbundling, which is subject to a further Consultation Paper and raises the debate as to whether re-bundling of small and mid-cap research will improve coverage of SMEs.