Trading Tides: A review of 2025 and the outlook for 2026
In this latest installment in our Trading Tides series, we sat down with Product & Client Development Manager at the Luxembourg Stock Exchange (LuxSE), Luigi Campa to get his insights on what trading looked like in 2025 and what the outlook is for the year ahead.
In Europe, fixed income trading was active and well-functioning, even if it was not a peak year. Volatility was generally lower than in the previous two years, though still above pre-2022 norms. There was a brief spike in volatility in the spring, but this proved temporary and gradually eased as the year progressed. Overall, volatility remained largely event-driven and closely linked to central banks’ communication. Against this backdrop, LuxSE recorded high levels of trading activity over the course of the year, with 25% more trades in 2025 compared to 2024.
The move towards greater electronification continued, with wider adoption of a range of trading protocols. Portfolio trading gained further market share, notably for ETF rebalancing and large credit portfolio rotations. At the same time, electronic RFQ models and CLOB or all-to-all platforms also saw increased usage, reflecting a more diversified and flexible market structure.
LuxXPrime now offers more than 2,100 bonds for trading, continuously quoted by three active liquidity providers – EUWAX AG, Banca Sella Holding SpA and Equita SIM. We also expanded the product universe with the introduction of sovereign bonds, alongside corporate and financial issuers. Today, over 800 sovereign, sub-sovereign and agency bonds are available on the platform. In parallel, we saw growing interest and trading activity in green, social and sustainability-linked bonds.
Direct market access also allows retail investors to invest in individual instruments without the extra layers of cost typically associated with investment funds. This approach aligns well with EU objectives to encourage direct household investment, deepen capital markets and support long-term economic growth.
Volatility is likely to remain event-driven, influenced by uncertainty and unexpected developments, rather than sustained structural stress. Inflation expectations are broadly close to target in Europe, while in the US inflation is expected to ease but remain more volatile than in the euro area.
From a market structure perspective, the rollout of the Consolidated Tape Provider should begin to reshape fixed income markets in 2026, improving post-trade transparency, data quality and market oversight. At the same time, data-driven and quantitative models are set to play an even greater role in trading strategies and investment decision-making.
How would you characterise bond trading activity over the course of 2025?
Bond markets in 2025 were marked by strong primary market activity globally, with issuance volumes rising across all asset classes. As a result, the overall stock of both public and private debt continued to grow. Despite elevated debt levels and a more complex global backdrop, markets proved resilient and did not experience prolonged periods of stress or disorder.In Europe, fixed income trading was active and well-functioning, even if it was not a peak year. Volatility was generally lower than in the previous two years, though still above pre-2022 norms. There was a brief spike in volatility in the spring, but this proved temporary and gradually eased as the year progressed. Overall, volatility remained largely event-driven and closely linked to central banks’ communication. Against this backdrop, LuxSE recorded high levels of trading activity over the course of the year, with 25% more trades in 2025 compared to 2024.
Have you observed any notable shifts in investor behaviour or trading patterns?
Fixed income markets operated smoothly, supported by improved liquidity, particularly in sovereign and investment-grade corporate bonds. Bid-ask spreads narrowed, pointing to more efficient trading conditions.The move towards greater electronification continued, with wider adoption of a range of trading protocols. Portfolio trading gained further market share, notably for ETF rebalancing and large credit portfolio rotations. At the same time, electronic RFQ models and CLOB or all-to-all platforms also saw increased usage, reflecting a more diversified and flexible market structure.
Focusing on LuxXPrime, how has LuxSE expanded its retail bond trading offering in 2025?
In 2025, we further strengthened LuxXPrime with the addition of Banca Sella and Equita SIM as new primary liquidity providers. Since becoming operational, Banca Sella and Equita SIM have broadened the range of fixed income products available and contributed to deeper liquidity on the platform.LuxXPrime now offers more than 2,100 bonds for trading, continuously quoted by three active liquidity providers – EUWAX AG, Banca Sella Holding SpA and Equita SIM. We also expanded the product universe with the introduction of sovereign bonds, alongside corporate and financial issuers. Today, over 800 sovereign, sub-sovereign and agency bonds are available on the platform. In parallel, we saw growing interest and trading activity in green, social and sustainability-linked bonds.
How important is retail-sized bond trading in making bond markets more accessible and encouraging broader participation?
Retail investor participation is a key priority for us. Their involvement supports high standards of transparency, fair pricing and quality of execution, both before and after trades. Facilitating direct access to bonds is central to our broader objective of making financial markets more accessible, while offering investors a wider range of investment opportunities and issuers additional funding channels.Direct market access also allows retail investors to invest in individual instruments without the extra layers of cost typically associated with investment funds. This approach aligns well with EU objectives to encourage direct household investment, deepen capital markets and support long-term economic growth.
Looking ahead, what trends do you foresee shaping the bond trading landscape in 2026?
High levels of public and private debt are likely to remain a defining feature, making market stability and resilience essential. Central banks are expected to stay focused on ensuring orderly market conditions.Volatility is likely to remain event-driven, influenced by uncertainty and unexpected developments, rather than sustained structural stress. Inflation expectations are broadly close to target in Europe, while in the US inflation is expected to ease but remain more volatile than in the euro area.
From a market structure perspective, the rollout of the Consolidated Tape Provider should begin to reshape fixed income markets in 2026, improving post-trade transparency, data quality and market oversight. At the same time, data-driven and quantitative models are set to play an even greater role in trading strategies and investment decision-making.
