ESMA Supervisory Briefing on Algorithmic Trading
Summary
The European Securities and Markets Authority (ESMA) has issued a supervisory briefing to support consistent supervision of algorithmic trading across the EU. The briefing provides National Competent Authorities with tools and clarified expectations for supervising firms engaged in algorithmic trading under MiFID II, including considerations for AI.
What changed
ESMA has published a supervisory briefing aimed at harmonising the oversight of algorithmic trading across the EU. This non-binding guidance provides National Competent Authorities (NCAs) with practical tools and clarified expectations regarding pre-trade controls, governance, testing, and outsourcing of algorithmic trading systems, as well as considerations for the use of artificial intelligence in trading operations. The briefing is intended to address supervisory practice divergences and ensure robust approaches to advanced technologies.
While the briefing is non-binding, it serves to support NCAs in their day-to-day supervision of firms engaged in algorithmic trading under MiFID II. Regulated entities, particularly those involved in algorithmic trading and the use of AI, should familiarise themselves with the clarified expectations and ensure their internal controls, governance, and testing frameworks align with the guidance to avoid potential supervisory scrutiny or divergence in enforcement actions across member states.
Source document (simplified)
ESMA issues a supervisory briefing on algorithmic trading
Trading 26/02/2026 The European Securities and Markets Authority (ESMA), the EU’s financial markets regulator and supervisor, today published a supervisory briefing to support consistent supervision of algorithmic trading across the EU.
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
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| Date | Reference | Title | Download | Select |
| --- | --- | --- | --- | --- |
| 26/02/2026 | ESMA74-1505669079-10311 | Supervisory briefing on algorithmic trading in the EU | | |
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