After Hours: The Rise of Europe's Closing Auctions

A major feature of equity markets over the past decade there has been the steady increase in the amount of trading taking place at the close. This trend, driven largely by the increase in passive investing, has been most pronounced in Europe, where closing auctions have begun to account for as much as 25% of a stock’s average daily trading volume. It is arguably the industry’s biggest catch 22: Closing auctions by their nature work best as a centralised process, meaning there is no desire for competing, price-forming auctions. However, that hands significant pricing power to the primary exchanges where auctions take place.

This TABB Group report, After Hours: The Rise of Europe’s Closing Auctions, is based on interviews with senior European buy-side traders, and reviews the rise in closing volumes, its impact and the appetite for alternative closing systems.