pc
nid 91716
Apr 02, 2026
tojuri@vixio.com
Netherlands
Dutch Authority for the Financial Markets
financial services
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1888 charsNetherlands' Financial Authority Clarifies Expectations for Algorithmic Trading Governance
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.
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2200 charsDutch Authority for the Financial Markets Sets Expectations for Algorithmic Trading Governance
On April 1, 2026, the Dutch Authority for the Financial Markets (AFM) published its expectations for investment firms and banks using algorithmic trading and direct electronic access (DEA) providers.
The expectations align with recommendations from the European Securities and Markets Authority (ESMA) supervisory briefing on algorithmic trading and establish consistent application of obligations across the European Union.
The AFM has identified three key supervisory priorities:
Artificial intelligence (AI) and machine learning - investment firms and banks must demonstrate a concrete understanding of risks associated with AI and machine learning, ensuring trading algorithms and strategies remain explainable, controllable, and unintentionally non-trading, with clear accountability lines.
Definitions and retesting of algorithms - firms must adopt consistent definitions of what constitutes a trading algorithm and when substantial modifications occur.
Direct Electronic Access (DEA) - 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 Commission Delegated Regulation (EU) 2017/589 (RTS 6) in annual self-assessments, as these topics now fall under the Digital Operational Resilience Act ( Regulation (EU) 2022/2554 - DORA). Additionally, interim notifications under Articles 17(2) and 17(5) of the Markets in Financial Instruments Directive ( Directive 2014/65/EU - 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.
Firms that use algorithmic trading and providers of DEA are required to conduct an annual assessment of their trading systems, algorithms, trading controls, and the associated governance framework. In the third quarter of 2026, the AFM will request validation reports from selected investment firms and banks regarding their annual self-assessments under RTS 6.