Volatility’s Silver Lining: How Sell-Side Firms Thrive Amid Turmoil in Q2 2025

Sell-side optimism jumped dramatically in Q2 2025, led by those closest to the flood of trades. Execution desks – the trading teams handling client order flow – reported 81% of respondents optimistic, a remarkably strong showing. But it was the back-office heroes, the clearing desks, that hit near-record highs in optimism. These desks, responsible for settling trades and managing risk, thrived on the unprecedented derivatives volumes and volatility. By some measures, clearing desk confidence is at its highest level since modern surveys began, with optimism rates in the high-80s to 90% range in key markets. Interdealer brokers, the wholesale brokers who match trades between dealers, were practically euphoric – about 95% reported a positive outlook, making them the most optimistic cohort of all. By contrast, regional banks remained the most cautious segment; as mainly local lenders with smaller trading operations, they lagged far behind the broking and trading firms in sentiment. In short, every corner of the sell-side is upbeat about market conditions, but those directly benefiting from volatile trading flows (brokers, dealers, clearing firms) are especially bullish.
Q2 2025 sell-side optimism was exceptionally high across the board. This chart compares optimism levels between execution desks and clearing desks in each region, illustrating that clearing teams were as or more optimistic than execution teams in all major markets.
The tariff-driven volatility bonanza helps explain this divergence. Execution traders certainly profit from heightened activity, but they also navigate razor-thin spreads and demanding clients. Clearing businesses, on the other hand, collect fees on record volumes and saw risk management models validated under stress. One London clearing executive quipped that post-Liberation Day, “every day felt like quarter-end” in terms of transaction counts. Meanwhile, interdealer brokers thrived by servicing frantic hedging among banks – a trade war is great news when your job is to fill the gap between panicked buyers and sellers. Regional banks, however, faced a different reality: while big investment banks and brokers revel in volatility, smaller banks worry about its ripple effects on the real economy and credit markets. The result is a stark optimism gap by role – those who make markets are riding high, while those more exposed to economic fundamentals remain sober.

North America Leads as Europe and Asia Diverge

Another key finding is North America’s dominance in sentiment. U.S. and Canadian sell-side desks were the most upbeat globally – in North America, fully 90% of both execution and clearing respondents reported optimism, topping all other regions. This confident outlook aligns with North America’s outsized role in global markets (the U.S. now accounts for ~55% of the world’s equity market capitalization, up from 30% two decades) and the hefty trading volumes seen on U.S. exchanges during the tariff turmoil. European desks were a notch less sanguine: roughly 80% of European execution teams and 78% of clearing teams were optimistic, reflecting solid but slightly more tempered confidence. Asia-Pacific (APAC) presented the most mixed picture. APAC execution desks were the least optimistic of any major region (only 70% optimistic), perhaps owing to local economic concerns and direct trade-war exposure. Yet APAC clearing desks bucked the trend – optimism in APAC clearing spiked to 85%, higher than Europe’s, suggesting that Asia’s market infrastructure providers capitalized on the global volatility even if some Asian trading desks remained wary. The table below summarizes the regional breakdown:

  

Region Execution	Optimisn (%)	Clearing Optimism (%)
North America	90	90
Europe	80	78
APAC	70	85

*Source: SGX Q2 2025 Sell-Side Sentiment Survey.*

North America’s exuberance is no surprise – U.S. markets not only led the sell-off but also the rebound in trading revenue. Major American venues saw record activity in April (CME’s international volumes hit all-time highs in both Europe and Asia as wellcmegroup.com, underscoring that the U.S.-driven turmoil reverberated worldwide). Europe’s slightly lower optimism may reflect a more cautious outlook amid slower growth and energy uncertainties, while Asia’s split sentiment hints at internal disparities: developed Asian financial hubs like Singapore and Tokyo reaped the benefits of volume surges (boosting clearing optimism), even as emerging market participants felt the pinch of potential economic fallout. Despite these nuances, optimism levels in all regions remained historically elevated – a testament to how well the financial sector has adapted to turbulent times.

Resilience Rivaling March 2020’s Turmoil

Underpinning this confident outlook is the sense that the financial system’s plumbing is sturdy even under extreme stress. The chaotic spring of 2025 was the biggest test of market infrastructure since the COVID-induced turmoil of March 2020, and by most accounts it passed with flying colors. Back in 2020’s crash, panic-selling spiked volumes and margin calls, but crucially, the system held: “for all the turmoil and anxiety, both market functioning and financial intermediation proved resilient,” noted the BIS after the March 2020 meltdownbis.org. Post-2008 reforms had strengthened banks and clearinghouses, allowing them to absorb rather than amplify. Indeed, regulators found that central counterparties (CCPs) – the clearinghouses guaranteeing trades – remained resilient throughout that crisis, even though margin calls were far larger than expected. Fast-forward to Q2 2025, and once again these institutions demonstrated remarkable robustness. Record trading volumes coursed through exchanges and clearing systems without major incident. There were no exchange outages, no clearing failures; the only glitches were a few brief trading halts (as circuit-breakers tripped to cool overheated markets) – signs of controlled stress rather than chaos. For market veterans, the smooth functioning of “Liberation Day’s” fallout was vindication: the safeguards and capacity built over the past decade worked as designed. The infrastructure proved not just resilient but scalable, handling volumes that would have seemed fantastical a few years ago. It’s a far cry from the frail system of 2008, or even the fragmented liquidity of 2020. This robustness underlies the sell-side’s optimism – traders and brokers can be confident that the pipes of finance will hold under pressure, allowing them to trade aggressively when opportunity knocks.
At the same time, global watchdogs are not complacent. The IMF warned in April that financial stability risks have risen significantly amid tighter conditions and trade uncertaintyimf.org. In other words, the very volatility enriching sell-side desks could foreshadow broader hazards. But on the ground, such abstract risks feel outweighed by day-to-day trading fortunes. High volatility means high volumes, which (so long as systems cope) means higher revenues for brokers, dealers, and exchanges. The contrast is almost ironic: the specter of a stagflationary trade war haunts central bankers, even as it invigorates the trading community.

Implications for Traders and Brokers

What does this surge in sell-side confidence mean for market participants? For one, it’s a reminder that one trader’s risk is another’s reward. Periods of turmoil – while challenging for investors and corporations – can be immensely lucrative for intermediaries who thrive on volume and volatility. Retail and institutional traders should take note that liquidity is abundant and market-makers are engaged; despite the scary headlines, the machinery of trading is humming. Deep pools of liquidity and resilient infrastructure imply that even extreme market moves can be navigated without the system breaking. That’s good news for anyone transacting in size – your brokers and counterparties are, by and large, steady and open for business even in stormy conditions.
However, traders should also be mindful of the flip side: extreme optimism on the sell-side can indicate complacency creeping in. When nearly all the brokers in the room are bullish, it pays to ask tough questions. The trade-war volatility of Q2 2025 has clearly been a money-maker, but will conditions stay as favorable? If geopolitical risks escalate further or economic stress mounts, today’s flush trading profits could turn into tomorrow’s credit concerns (even trading firms are not immune to broader financial contagion). In that sense, prudent risk management is as important as ever – a point that the most seasoned desks, flush with Q2 gains, surely appreciate.
For now, though, the message is clear: the market’s middlemen have learned to stop worrying and love the volatility. Execution and clearing desks are confidently charging forward, backed by robust systems and buoyant client activity. The infrastructure built after the last crisis is handling the strain, and it’s enabling brokers and dealers to do what they do best: provide liquidity and rake in volume-driven revenues. For traders and investors, this translates into tighter spreads, deep liquidity, and the knowledge that the market’s plumbing can handle even sudden shocks. The second quarter of 2025 showed that even a “Liberation Day” trade war scare couldn’t knock markets off their axis – instead, it energized the very players who keep markets running. And as long as they remain optimistic, the wheels of global finance will continue to turn, come hell or high tariffs.

Sources:
Financial market data and sentiment surveys from SGX Q2 2025;
Tradeweb market commentarytradeweb.com;
Industry analyses (Acuiti, Coalition Greenwich), BMLL Technologies analysisbmlltech.com;
CME Group volume statisticscmegroup.comcmegroup.com;
IMF Global Financial Stability Report, April 2025imf.orgimf.org;
BIS and FSB post-March 2020 reports on market resiliencebis.orgfsb.orgfsb.org.