How does the volume cap limit dark trading under equity waivers?

Waivers let trades take place without the orders being shown to the market first. This is often called dark trading. If too much volume moves into the dark, the prices on lit order books become less reliable, because they reflect a shrinking share of real supply and demand. The volume cap therefore limits trading under waivers so that it does not unduly harm price formation. The exam material describes the aim as protecting price information. The original Regulation spoke of price formation. The current Article 5 states no aim, but ESMA's yearly review of the 7% level must weigh the efficiency of price formation. The waivers themselves are covered in When can a venue trade shares without pre-trade transparency?

Regulation (EU) 2024/791 replaced Article 5 from 28 March 2024. There is now one cap, applied across the EU. Trading in a share under the reference price waiver may not exceed 7% of total trading in that share in the EU as a whole during the previous 12 months. There is no separate limit for each venue, and the negotiated-trade waiver no longer counts. When the 7% limit is exceeded, venues must suspend their use of the reference price waiver for that share. The venues take this decision themselves, on the basis of ESMA's data, within two working days of its publication, and the suspension lasts three months.

ESMA publishes the figures every quarter, within seven working days after the end of March, June, September and December. For each instrument it gives the total EU trading volume over the previous 12 months, the percentage traded under the waiver and the methodology used. To make this possible, every venue must have systems that identify all trades carried out under the waiver. Monitoring under the new rule began on 29 September 2025, and ESMA published its first single volume cap results on 9 October 2025. Until that switch, as ESMA explained in its statement of 27 March 2024, the old double cap kept applying, to both the reference price waiver and the negotiated-trade waiver for liquid shares; it has since been wound down, and ESMA now works from transaction reports rather than separate venue data. ESMA must report on whether 7% is the right level by 29 September 2027 and every year after that, and the Commission may change the threshold by delegated act.

The exam material describes the original mechanism, which applied from 3 January 2018 until the switch in October 2025. It had two limits. On any one venue, trading under the waivers could not pass 4% of all trading in the instrument across the EU during the previous 12 months. Across the EU as a whole, the limit was 8%. When the 4% limit was breached, the authority that had granted the waiver suspended its use on that venue; when the 8% limit was breached, all competent authorities suspended its use across the EU. Either suspension came within two working days (two days in the exam material) and lasted six months. ESMA published the data monthly, within five working days of each month-end. It published an extra report, within five working days of the 15th of the following month, once trading exceeded 3.75% on a venue or 7.75% across the EU.

The old cap applied to the reference price waiver and to negotiated trades in liquid shares. As the exam material notes, negotiated trades in illiquid shares and those subject to conditions other than the prevailing market price were outside it. Compared with that version, the current rule has one 7% EU-wide limit instead of 4% and 8%; covers only the reference price waiver; is applied by venues for three months rather than by authorities for six; relies on quarterly data within seven working days rather than monthly data within five; and has no early-warning reports. Because no negotiated trade counts any more, the old exemptions no longer need stating.