Regulatory Alerts2023-06-28
AFM Market Watch 8: Algorithmic Trading
The Dutch Authority for the Financial Markets (AFM) issued this report to clarify terminology, assess risks, and outline supervision regarding algorithmic trading on Dutch capital markets. The document highlights that algorithmic trading now constitutes 74% of transactions, primarily driven by non-Dutch firms, and emphasizes the need for robust control frameworks to prevent market disruptions like flash crashes. Additionally, the AFM warns that advanced machine learning models may inadvertently learn to manipulate markets and requires firms to rigorously test algorithms to ensure orderly trading conditions.
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