The Netherlands Authority for Consumers and Markets (ACM) has conducted an examination of how businesses trading in the wholesale markets for electricity and natural gas manage the risks associated with algorithmic trading. While businesses are aware of these risks and have implemented measures, ACM has noted areas that require further improvement.

Algorithmic trading enhances efficiency in trading by automating decisions and projecting supply and demand. However, it also introduces risks such as data errors and reduced market transparency, which can lead to disruptions. ACM's recent checks revealed that while most businesses utilize pre-trade controls to mitigate risks, the effectiveness and implementation of these controls vary significantly across firms.

ACM's review included access to business documents to ensure compliance with the tightened REMIT regulations effective from May 2024. The authority found that while many companies have independent roles overseeing algorithm approval, the clarity of responsibilities is often lacking, which is crucial for effective risk management.

In the upcoming months, ACM plans to discuss its findings with the involved businesses and will focus on several key areas for improvement, including establishing a clear governance structure, maintaining relevant data for regulatory checks, and ensuring robust pre-trade controls to prevent erroneous orders and systemic risks.

ACM will continue to oversee algorithmic trading practices and collaborate with the EU Agency ACER and the Dutch Authority for the Financial Markets (AFM) to provide guidance and ensure compliance with REMIT obligations.