LONDON, March 6 (Reuters) - European stock exchanges grabbed market share from alternative trading venues as volatility spiked in February, the busiest trading month in a decade.
Global equity trading surged as investors rushed for the exits on growing concerns over rising inflation, and volatility-sensitive funds were forced automatically to reset their exposure to risk assets.
Turnover across European trading venues last month was the highest since May 2008, with around 2.6 trillion euros traded, according to data from Thomson Reuters Market Share Reporter.
Regulated exchanges took significant market share from alternative trading venues such as unregulated ‘dark pools’, boosting their share since the start of the year to 65.6 percent, the most since 2012, according to UBS analyst Michael Werner.
Trading on dark venues reached an all-time high in October last year, capturing 9.5 percent of trading volume on the 12 largest equity markets in Europe, but fell to 8.2 percent last month, according to CBOE Global Markets.
Cash equity volumes surged on the region’s biggest exchanges, with Deutsche Boerse leading the way with a 45 percent year-on-year increase.
ETF trading volumes grew 23 percent in Europe, and derivative volumes grew at Euronext and Deutsche Boerse, Werner said in a note.
Limits to trading on dark pools, set to be implemented by the European Union’s market watchdog on March 12, could deliver a further boost to the exchanges.
UBS’s Werner expects dark trading volumes to decline by around 350 basis points as a result of the caps, likely cementing the exchanges’ dominance.
“Of this 350bp of market share, we expect the regulated exchanges to capture more than 70 percent, with the remainder going to the lit MTFs (multilateral trading facilities),” he added, saying these shifts will occur in the coming months.
The European Securities and Markets Authority (ESMA) is set to publish data specifying which stocks will be subject to limits to dark pool trading on March 7.
Reporting by Helen Reid Editing by Tom Pfeiffer and Hugh Lawson