By Jeff O’Connor, Head of US Market Structure and ATS Sell-Side Strategy, Liquidnet
Headlines point to a macro catalyst vacuum, and a federal government shutdown certainly doesn’t help. But here’s what should be getting attention: 20 billion+ shares are trading daily in U.S. equity markets on what are essentially non-event days.
The numbers are staggering. The 2025 daily average of 16.9 billion shares represents a 48% year-over-year jump—the highest single-year percentage increase ever recorded. Share counts and notional levels are hitting new records almost monthly. While structural and cyclical shifts are driving this surge, one thing is certain: these volume levels are the new norm.
But there’s a catch. The traditional institutional flow that once made up the bulk of 5-7 billion shares traded daily just seven years ago? It’s losing market share to non-traditional liquidity sources, creating new complexities for buy-side traders.
Off-Exchange Becomes the Exchange
When off-exchange first consistently cleared 50% of total market volumes in Q4 ’24, it was newsworthy. As seen in Figure 1, it now clears that mark with ease, regularly hitting crisis-level volume numbers typically associated with black swan events—except this time, it’s not brief. It’s standard.
Figure 1: TRF Volume, October 2024 – October 2025
The drivers are clear: 40%+ of all volumes now come from non-bank market making and HFT firms (higher spreads and real price volatility fuel this). Retail flows can hit 20% of total volumes, boosted by U.S. equity outperformance. And trade sizes continue to shrink as market makers migrate to ATS venues and OTC reported volumes, eroding bank-owned market share, as shown in Figure 2.
Figure 2: US ATS Breakdown, Percentage of Volume
The Volatility Paradox
Volatility has been stripped from the market through Q3 and Q4, but don’t mistake calm for safety. The first half of 2025 saw the S&P 500 move +1% on 36 days (30% of trading days). The second half? Just four days (5% of the time).
Yet uncertainty lingers. The market craves certainty on inflation, the dollar, corporate results, and fiscal policy—the very things that created shocks in the first half of 2025 and there’s evidence of an undercurrent.
SPY: The Canary in the Coal Mine
SPY trading tells the story. The most widely traded ETF is averaging ~$40 billion in daily notional for 2025, significantly higher than any other security. Over the past 5-6 weeks, that number has jumped 25% to nearly $50 billion, highlighted in Figure 3.
Figure 3: SPY: Notional Over the Years
Unlike the VIX—mainly an institutional tool—SPY serves everyone: institutions, hedge funds, advisers, and individual investors. It’s a substitute for futures, single securities, and mutual funds. In a market where traditional volatility measures have been muted, SPY’s elevated trading volumes reveal what macro uncertainty really looks like.
What’s particularly telling: throughout 2024, SPY price growth and notional traded diverged. Since April 2025, they’re running together—evidence that SPY is being used as both an exposure tool and a hedge against elevated uncertainty.
Blocks: Down But Not Out
Block appetite remains subdued, as seen in Figure 4—an aftereffect of a year spent navigating economic uncertainty and intraday volatility. Trade sizes have dropped significantly, as seen in Figure 4, particularly in ATS venues as exchanges now provide higher average fill sizes. Some ATS platforms have completely shifted their profiles in terms of average size and percentage of block fills.
Figure 4: Average Trade Size by Venue Type*
*Excluding auctions and after hours
As ATSs evolve, Liquidnet maintains top-tier market share in overall blocks done in ATS venues and continues to lead in percentage of blocks relative to total pool volume. While Liquidnet’s Negotiation ATS remains a block-centric venue, the Liquidnet H2O ATS has adapted to market-evolving order sizes, making dark liquidity available across changing trade tactics and urgency levels.
The ability to offer traditional negotiated blocks alongside continuous volume execution puts Liquidnet in a unique position, as seen in Figure 5—equipped for any market conditions to suit trading needs, whether minimizing market impact through blocks or completing trades on schedule through continuous algorithms.
Figure 5: Liquidnet ATS Block Market Share
What’s Next
STA National kicks off this week with the usual suspects: private pools, 24-hour trading, hedge fund disclosure. But the rising chorus around the Order Protection Rule signals an SEC regime ready to assert itself. “Harmonization” is the betting favorite for most-used panel term, with “market efficiency” a close second.
Earnings season also launches this week, adding weight to an already rich market in valuations and sentiment. While earnings rarely catalyze volumes directly, portfolio managers hunt for volatility bands to adjust fundamental positions. Current consensus expects 8% year-over-year S&P 500 growth.
Correlations sit at extreme lows—a signal of high risk, but also an opportunity for portfolio managers confident their picks can outperform. Should macro uncertainty clear, intraday volatility stay low, and policy stabilize, block appetite will return.
The structural shifts—market making and HFT dominating U.S. volumes—aren’t going anywhere. But changing conditions will reshape how portfolio managers approach liquidity and those who adapt will thrive.
