The update directly addresses algorithmic trading governance and risk management obligations for investment firms and banks engaged in electronic trading activities, which falls squarely within Investment Services.
Low confidence — REQUIRES HUMAN REVIEW. While some regulated entities may be retail banks, the update focuses on algorithmic trading and DEA provision (wholesale/institutional activities), not consumer deposit-taking or retail banking products.
Specialism
The update directly addresses AI and machine learning governance in algorithmic trading, requiring firms to ensure trading algorithms remain explainable and controllable, which is core AI regulation in financial services.
Mandatory inheritance: Artificial Intelligence is a child of Technology, so Technology must be raised as the secondary tag.
2026-04-02 08:54:29·tojuri@vixio.com
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TITLE: Netherlands' Financial Authority Clarifies Expectations for Algorithmic Trading Governance
BODY:
On April 1, 2026, the Netherlands Authority for the Financial Markets (Autoriteit Financiële Markten, AFM) published guidance clarifying expectations for investment firms and banks using algorithmic trading and direct electronic access (DEA) providers. The guidance aligns with recommendations from the European Securities and Markets Authority (ESMA) supervisory briefing on algorithmic trading and establishes consistent application of obligations across the European Union.
The AFM has identified three key supervisory priorities. First, investment firms and banks must demonstrate concrete understanding of risks associated with artificial intelligence (AI) and machine learning (ML), ensuring trading algorithms and strategies remain explainable, controllable, and unintentionally non-trading, with clear accountability lines. Second, firms must adopt consistent definitions of what constitutes a trading algorithm and when substantial modifications occur. Third, pre- and post-trade controls remain essential for managing market and credit risks for both DEA providers and users.
The AFM will integrate ESMA's recommendations into sector supervision and has announced administrative simplifications. Firms are no longer required to include Articles 14 and 18 of Regulatory Technical Standard 6 (RTS 6) in annual self-assessments, as these topics now fall under the Digital Operational Resilience Act (DORA). Additionally, interim notifications under Articles 17(2) and 17(5) of the Markets in Financial Instruments Directive (MiFID II) are no longer required. Investment firms and banks need only notify the AFM when commencing or terminating algorithmic trading on Dutch trading platforms and when beginning or ending DEA provision.
In Q3 2026, the AFM will request validation reports from selected investment firms and banks regarding their annual self-assessments under RTS 6.