London dark trading volumes may be up to three times greater in value than official exchange data suggests, the Financial Conduct Authority (FCA) has concluded. The regulator says that private transactions routed through banks and other financial forums, priced off the London Stock Exchange (LSE) but executed away from it, have been systematically undercounted.
Dark trading refers to deals struck through off-exchange channels at prices derived from the LSE’s public order book. Because these trades do not appear in standard exchange data, the FCA believes market liquidity has been substantially understated.
FCA Paper Finds London Dark Trading Volumes Pose No Market-Quality Threat
The regulator’s occasional paper No. 29 found that dark trading, at current levels, does not appear to be harmful to market quality in the aggregate UK equity market. That finding is a direct rebuttal to concerns that off-exchange activity was degrading price formation.
LSE executives said in May that the proportion of trading taking place directly on exchanges was the lowest of any major global market. The FCA’s analysis now frames that figure differently: a larger share of genuine activity was simply invisible to exchange-level measurement.
Wise, the chip designer Arm, and the building materials group CRH have all shunned London for the US in recent years. The FCA’s research is intended partly to ease concerns about the City’s capital market competitiveness and slow the drift of listings to New York.
Consolidated Tape Timeline and Controversy
On transparency, the FCA’s equities consolidated tape page places the start of the equities consolidated tape (CT) in 2027, not 2028 as previously reported. The CT will aggregate post-trade data across venues to give a unified view of UK equity market activity.
The FCA published consultation paper CP25/31 in November 2025, setting out its proposed framework for a UK equities CT run by a Consolidated Tape Provider. The consultation covered shares, ETFs, depository receipts, and certificates, with a deadline extended to 13 February 2026. The London Stock Exchange Group has argued that the CT’s structure could give investors who withhold data a competitive advantage over those who supply it.
On the bond side, the FCA appointed Etrading Software as the winning bidder following a tender process that ended in August 2025. After a legal challenge, the High Court lifted the suspension on the bond CT contract in December 2025. According to the FCA’s bond consolidated tape page, Etrading Software aims to launch the UK bond CT service on 22 June 2026.
Takeover Premium Data Adds a Second Lift to City Sentiment
Separate data on takeover activity has offered further support to London market confidence. The Financial Times reported that more London-listed companies received public bids at a premium of 20 per cent or more above their share price between March and June than companies on any other major exchange. UK-listed firms attracted a total of £44 billion in public bids over that period, with overseas buyers including offers for Segro and Beazley.
The easyJet situation crystallised into a firm offer. Apollo agreed a $7.7 billion takeover of the airline after Castlelake withdrew its pursuit, according to Reuters. Apollo’s offer stood at £7.15 per share, 25p above Castlelake’s final proposal of £6.90 per share and an 81% premium to easyJet’s closing price of 394p on 28 May 2026, the last trading day before Castlelake’s interest became public. The easyJet board unanimously recommended Apollo’s cash offer.
Castlelake’s withdrawal was treated as a statement under Rule 2.8 of the UK Takeover Code, ordinarily barring it from returning with a fresh proposal. A structural complication underpinned the entire contest: EU rules require airlines operating within the bloc to be majority-owned and controlled by EU citizens. Castlelake had proposed partnering with two EU nationals to hold majority control through an EU-based entity, an arrangement that would have needed regulatory acceptance.
On the policy front, Chancellor John Healey faces pressure to sustain momentum in financial services. Former Chancellor Rachel Reeves announced that newly-listed companies would receive a three-year exemption from the 0.5 per cent stamp duty on shares, a measure aimed at strengthening the case for London listings. Whether the new administration treats capital markets reform as a priority will be the question that shapes the City’s medium-term outlook.
