AFME report card shows average daily trading activity in European main markets dips in first half

AFME Equity Primary Markets and Trading Report.

Average daily equity trading activity on European main markets and MTFs dipped 7% to €68.2bn in the first half compared to the same period last year, according to the AFME Equity Primary Markets and Trading Report.

 

It also found that the number of instruments banned from dark trading increased to 307 at the EU or trading venue level as of July 2021 from 205 in December 2020.

The current number represents 1% of the universe of equity like instruments of the 26,791 in on the European Securities and Markets Authority’s DVC files.

The UK represents around a third of the suspended instruments and 8% of the 1,634 UK ISINs registered in the ESMA DVC database.

However, changes are underway in the country in the post Brexit era. In July, the UK government unveiled a list of reforms that aim to overhaul its wholesale financial markets, underscoring the willingness to split from MiFID II,  a piece of legislation it helped to design.

This included scrapping the cap on the amount of trading that investors can execute in dark pools.

The AFME report also found that block trades or those traded above large in scale (LIS) threshold normalised to a quarterly total of €92bn in the second quarter.

According to BigXYT data, the percentage if dark traded as LIS blocks was 35%, slightly below the 38% reported in the first quarter.

As for other activities, European exchanges recorded a significant 70% hike in equity underwriting compared to the same period last year and a 108% spike from the first half in 2019. Proceeds reached a total of €67.8 bn, the highest quarterly amount since the first quarter in 2015.

The London Main Market led the way with €28.03 bn followed by Frankfurt Main, €201bn and Euronext Amsterdam, €13,3bn.

There as a healthy initial public offering (IPO) flow of €21bn, replicating the robust figure during the first three months.

The report attributed the rise to the drop in equity risk premium from 5.9% in Q4 2020 to 5.25% in Q2 2021 in Western Europe as well as a decline of 220 basis points from Q2 which resulted in lower cost of equity for primary and secondary offerings.

©Markets Media Europe 2021

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