Key facts
- FCA estimates London Stock Exchange trading volumes are up to three times higher than previously thought when accounting for dark trading.
- Dark trading involves private deals made via banks and financial forums using LSE prices.
- The FCA suggests this indicates greater market liquidity than exchange data alone suggests.
- The LSE has the lowest proportion of on-exchange trading among major global markets.
- The FCA plans to enhance share trading transparency by 2028.
Trading volumes on the London Stock Exchange are significantly higher than previously estimated, with the Financial Conduct Authority (FCA) believing that when "dark trading" through non-official channels is taken into account, volumes can be up to three times greater in value. This suggests that market liquidity is higher than indicated by exchange data alone.
Executives at the London Stock Exchange Group stated in May that the proportion of trading conducted directly on exchanges is the lowest among major global markets. The FCA aims to introduce greater transparency on share trading by 2028, though some investors have raised concerns about potential advantages for those who avoid data provision under proposed "consolidated tape" plans.
These findings come amid efforts to ease concerns about the City's capital market struggles and to prevent companies from relocating to New York for better investment offers. Several firms, including Wise, Arm, and CRH, have recently opted for US listings. Despite concerns over trading, separate data indicates a potential for large takeover deals, with more London-listed companies receiving public bids at a premium of 20 per cent or more between March and June than in any other major market. UK firms received a total of £44bn in such bids, with overseas buyers acquiring companies like Segro and Beazley, and easyJet being pursued by Castlelake and Apollo.