Average daily equities trading on European main markets and MTFs rose by 14% between Q4 2023 and Q1 2024 according to a recent publication for the Association for Financial Markets in Europe (AFME), with LSE and Frankfurt leading the pack. Despite this increase, however, a 6% drop was seen YoY.
Turnover ratio rose to 110% after H2 2023’s record low of 100%. AFME stated that there has been a “pronounced deterioration in market liquidity” since 2018, with turnover ratio falling from approximately 150% to between 100 and 110% over the previous year.
European primary markets are currently facing a liquidity crisis, with initiatives including to address this including the EU Listing Act.
READ MORE: ‘A moment of transition’ – EU Listing Act goes live
Further research from bigxyt noted that 74% of total addressable liquidity in Q1 came from on-venue trading, slightly above the approximate 70% that AFME has seen since 2018.
READ MORE: All the light we cannot see – why the decline in continuous lit trading?
Equity capital raising on European exchanges reached €29.5 billion in Q1, increasing by 4% quarter-on-quarter. Secondary markets contributed most significantly to this figure, raising €23 billion over the quarter, but saw an increase of just €0.3 billion from the end of 2023.
Initial public offerings (IPOs) raised just €5 billion in Q1 2024, but recorded a 387% YoY increase. While this is a significant increase, AFME notes that since 2010 the quarterly average has been €8 billion.
Junior exchanges, defined as venues with “less onerous listing requirements” that facilitate capital raising by small to medium enterprises and younger companies, issued €0.5 billion in enquiry capital over Q1 2024. This is the lowest quarterly value recorded since Q1 2009, AFME stated.
The London Stock Exchange led Europe’s equity capital raising pack, reporting €7.2 billion in the first quarter, followed by Frankfurt Stock Exchange-Prime with €4.1 billion. The Paris Stock Exchange and Borsa Italiana both reported €3.2 billion over the year so far.
AFME’s report also considers the double volume cap mechanism, which aims to limit equity trading under the reference price waiver and the negotiated transaction waiver on EU venues. There has been a slight decline in the number of instruments suspended under the mechanism, the report states, with the number suspended at the TV hitting its lowest point since August 2021.
©Markets Media Europe 2024
