Strong macroeconomic headwinds continue to buffet the trading environment. With the U.S. ‘fiscal cliff’ fast approaching, eurozone sovereign debt fears still at the forefront of investors’ minds and new regulations set to stifle activity still further, there appear little reasons to be bullish.

Trading volume on exchanges continues to be muted—for instance, U.S. equity volumes are on course to decline for a fourth consecutive year—and, following on from the typical summer slowdown, a low interest rate environment and general uncertainty around the pace of a global economic recovery continue to mean that volumes may remain tepid for some time yet.

In Europe, the epicenter of the current macroeconomic crisis, many market participants there are struggling to see where the upturn is going to come from.

“There are many reasons for the current low trading volume, all centered around uncertainty in the environment,” Kee-Meng Tan, managing director and head of agency broker Knight Capital’s trading group in Europe, told Markets Media.

“There are very few catalysts for change due to the overhanging European sovereign debt issue. We have seen many U.S. funds reduce their exposure in Europe drastically. The uncertainty is also presenting few drivers for investment in the region.

“Uncertainty around regulation is keeping many people from making firm plans and investment in business until things become clearer. New regulations could conceivably make it much more expensive to do business in Europe.  And a broader European Union financial transaction tax is certainly not going to help the situation.”

Market participants are hoping that the current low volume environment is not due to a long-term structural shift in the market and that there will, at some point, be a sustained pick-up.

“You can see from the latest quarterly reports from the big exchanges around the globe, nobody will have a record year in 2012, unfortunately,” Michael Krogmann, executive vice-president of Deutsche Börse, operator of the Frankfurt Stock Exchange, told Markets Media.

“Volumes are down not only in Europe, but across the globe. It is in all markets, cash as well as derivatives.”

However, despite all the doom and gloom some market participants have reasons to be optimistic for the future.

For one, the initial public offering market appears to be showing signs of life. German mobile operator Telefonica recently made its IPO debut on the Frankfurt bourse, becoming Europe’s largest new listing in more than a year.

“We’ve seen first very positive signals as the IPO market is back,” said Krogmann. “The last IPO saw Telefonica Germany raise €1.5 billion. This was a big success for our market and there are signs of recovery in the cash market.”

Krogmann added: “For the cash markets, it is a cyclical business. From my perspective, volumes will definitely come back in due course.”