MiFID II and Equity Market Liquidity, or There and Back Again

This article examines the impact of MiFID II on European equity market liquidity. MiFID II eliminated broker crossing networks, introduced caps on dark trading, and brought about new types of venues. The authors investigate the changes in the market in the lead-up to the January 3, 2018, implementation date and the early evidence supporting the expected liquidity shift toward block networks, periodic auctions, and systematic internalizers. Although all signs indicate limited change for end-investors, the delay in implementation of the double-volume caps means it is too early to fully assess the impact on trading costs.