On Thursday 24 July, the European Securities and Markets Authority (ESMA) announced the implementation of a new mechanism for capping trading volumes in equities from October 2025, as part of the review of the MiFIR regulation (see EUROPE 13524/31).
The new system will replace the current ‘Double Volume Cap Mechanism’ (DVCM) with a single ‘Volume Cap Mechanism’ (VCM). The first capping results are due to be published on 9 October. The current declaration system will be deactivated in January 2026.
Under the new mechanism, transactions carried out under the ‘reference price waiver’ must not exceed 7% of the total volume of trade recorded in the EU over a twelve-month period.
If this threshold is exceeded for a given financial instrument - such as a listed share or similar financial product - the trading platforms concerned will have to temporarily suspend the use of this waiver for the instrument in question, for a period of three months. Calculations will now be based on transactional data already collected by the relevant national competent authority.
ESMA has submitted a revision of the third regulatory technical standard (‘RTS 3’), which provides the operational framework for capping so-called ‘opaque’ transactions, i.e. those carried out under an exemption from the transparency requirements. However, the authority specified that the transition to the new mechanism would take place on the planned date, even though the revision had not yet been formally adopted.
See the data published by ESMA on the page dedicated to VCM: https://aeur.eu/f/i17 (Original version in French by Bernard Denuit)