ESMA issues a supervisory briefing on algorithmic trading

The briefing provides National Competent Authorities (NCAs) with practical tools and clarified expectations for supervising firms engaged in algorithmic trading under MiFID II. It focuses on key areas where supervisory practices have diverged, including pre-trade controls, governance arrangements, testing frameworks and outsourcing of algorithmic trading systems.  

Given the extended use of artificial intelligence in algorithmic trading, the briefing also touches upon these emerging technological developments, outlining considerations for the use of AI. This section aims to help supervisors assess new risks and ensure that firms adopt robust and responsible approaches when deploying advanced technologies in their trading operations.  

As a nonbinding convergence tool, the briefing complements the existing requirements and supports NCAs in taking a harmonised approach to oversight. 

Next steps

ESMA will share the supervisory briefing with NCAs to support day to day supervision. ESMA will continue to monitor market and technological developments and may update the briefing or develop further convergence tools as needed. 

Further information:

Cristina Bonillo

Senior Communications Officer
press@esma.europa.eu