The European Securities and Markets Authority (Esma) has confirmed it will switch from the current double volume cap mechanism (DVCM) to a single volume cap mechanism (VCM) in October 2025, as mandated under the Markets in Financial Instruments Regulation (MiFIR) Review.
Esma is the EU’s financial markets regulator, ensuring stability, transparency and investor protection across member states. The MiFIR Review is the EU’s effort to modernise its financial markets rulebook, making trading more transparent and efficient. It’s part of a wider push to simplify how markets work, improve investor protections, and ensure fairer access to data and trading across Europe.
Under the new rules, trading venues will be allowed to execute up to 7% of an equity or equity-like instrument’s total annual trading volume under the reference price waiver.
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“If the limit is exceeded, trading venues will need to suspend the use of the waiver for the concerned instrument for three months,” stated Esma.
Esma also outlined key technical changes: volume cap calculations will transition from venue-reported data to transaction reporting data collected by National Competent Authorities. Consequently, the existing DVCM reporting system will be decommissioned in January 2026.
With preparation underway for the new VCM data system, ESMA expects its first results publication on 9 October 2025 and encourages firms and trading venues to ready themselves for the Q4 implementation.
“This is a key change for institutional investors striving to understand pan-European trading activity across both lit and dark venues,” said Mark Montgomery, chief commercial officer at capital markets analytics firm big xyt. “Esma’s decision to move to a single volume cap mechanism is a clear signal of its intent to streamline the European equity market structure, simplify trading restrictions, and enhance transparency.
The shift away from venue-level caps toward a market-wide threshold, underpinned by regulator-sourced transaction data, reduces fragmentation and creates a more level playing field for assessing dark trading activity.”
