Prop Firms Concerned about Rise of “Off-Venue” Trading: Survey

Mirroring what has been a refrain from the prop trading sector in FX for many years, a survey has found growing concern amongst these firms over “off venue” trading and its potentially negative impact on liquidity.

The latest quarterly report looking at this sector by Acuiti finds that while the majority of firms are content with liquidity conditions in markets, there are “emerging concerns” over weakening liquidity conditions, especially in Europe, which they link to a growth in “off book” trading activity.

Whilst the report looks across asset classes, the use of “off exchange” suggests these concerns are likely linked to equity markets and, perhaps, futures, however it is worth noting that the former in particular has seen solid growth in off exchange trading as larger accounts seek to minimise market impact. The role of some prop trading firms in the market impact seen from on exchange trading is not explored.

The report warns that if more trading shifts to bilateral or off-venue channels, displayed depth in order books will decline and price discovery may weaken. This is intuitive of course, but the experience in FX markets has not been that, with most consumers able to find ample liquidity on a range of multi- and single-dealer platforms, in addition to the central limit order books.

The concerns were not shared by US respondents, the report notes that more than 90% of US respondents said liquidity was either good or very good. The most commonly cited factor was exchange policy and incentive design, including fee structures, liquidity programmes and improvements to market structure that encouraged participation and market depth. Investment in technology was also cited as a factor in improved liquidity.

The report also found that costs continue to rise for this sector, 85% reported an overall increase in costs in 2025 compared to 2024. Exchange fees, staff and technology costs were the most cited reasons for this.

It also finds that around half of respondents that do not currently trade digital assets are considering doing so in 2026, but fewer than one in 10 are definitely committed to entering the market. If they do enter, they are likely to be doing so on a stronger financial footing, more than two-thirds of firms reported improved profitability in 2025.

The report also found that prop trading firms are following other institutions in encouraging a full return to the office. It finds that 81% of respondents had some level of flexibility for staff to work at home, but while 53% said this has helped staff retention, the balance said that productivity had worsened. As a result, 34% of firms that offered flexible working said they would implement a more office-based structure over the next two years.