Regulatory body ESMA readies for transition to single volume trading capacity
The European Securities and Markets Authority (ESMA) has announced that the EU will transition from the current Double Volume Cap Mechanism (DVCM) to a Single Volume Cap Mechanism (VCM) under the revised Markets in Financial Instruments Regulation (MiFIR) in October 2025 [1][3].
This transition marks a significant change in the trading volume limit, suspension rules, and reporting data sources for the VCM.
The new trading volume limit set by the VCM is a 7% limit on trading volume under the reference price waiver for each equity and equity-like financial instrument. This limit is calculated based on the total aggregated trading volume across the EU over the prior 12 months [1][3].
If a trading venue exceeds the 7% cap for a particular instrument, it must suspend the use of the waiver for that instrument for a period of three months [1][3].
The calculation of the volume cap will shift from venue-reported data (used in the DVCM system) to transaction reporting data collected by national competent authorities in Member States. The current DVCM reporting system will be decommissioned in January 2026 [1][3].
ESMA is developing a new VCM data system to support this transition. The first publication of VCM calculation results is expected on 9 October 2025, shortly after the mechanism's launch [1]. The DVCM reporting system will remain operational until January 2026 for a transition period [1].
ESMA encourages firms and trading venues to prepare for this significant change scheduled for Q4 2025. This update reflects the EU’s effort to modernize and streamline trading regulations for equity markets and improve oversight through enhanced data collection methods [1][3].
For more details about the formats and templates, please consult the dedicated VCM webpage provided by ESMA. Trading venues must base their decision to suspend the waiver use on the data published by ESMA under the dedicated VCM webpage [1][3].
ESMA has submitted for adoption the amendment to the Regulatory Technical Standard 3 (RTS 3). However, the VCM switch will occur even if the RTS 3 revision is not yet in place at the announced date [1].
| Aspect | Details | |------------------------|----------------------------------------------------------| | Transition Date | October 2025 | | New Volume Cap Limit | 7% of total EU aggregated volume over last 12 months | | Suspension Period | 3 months suspension of waiver if limit exceeded | | Reporting Data Source | Transaction reporting data via national competent authorities | | DVCM System End | January 2026 | | First VCM Publication | 9 October 2025 |
The EU's transition to the Single Volume Cap Mechanism (VCM) will impact the finance industry with a new volume cap limit of 7% on trading volume, calculated based on the total aggregated trading volume across the EU over the prior 12 months for each equity and equity-like financial instrument [1][3]. Trading venues that exceed this limit must suspend the use of the waiver for that instrument for a period of three months [1][3]. In preparation for this change, ESMA is developing a new VCM data system and encourages firms and trading venues to prepare accordingly [1][3].
