This proposition has been heavily criticized for going too far. The ability to trade non-displayed liquidity is important when aiming to reduce implicit execution costs. Furthermore, there is still no clarity on how the DVCs will work in practice. This paper shows examples of, and focus on the Negotiated Trade Waiver, a model of trade reporting commonly used in Sweden, Finland, Denmark, the UK and some continental exchanges. Faced with the reality of the Double Volume Caps, market participants must choose a path forward. While the effects of the DVCs are not yet known, it is clear that investment firms now have several theoretical and practical options.
This paper aims to analyze and explain each of these options.
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