The Dutch Authority for the Financial Markets (AFM) published a report on 13 April 2026 warning that AI-driven trading systems can contribute to market manipulation without explicit coordination, as the regulator announced tighter supervision of algorithmic trading and AI use across Dutch capital markets.
The report, titled ‘AI in Capital Markets: Balancing Innovation and Integrity’, sits on top of an April 1 supervisory notice in which the AFM said it would integrate ESMA’s expectations on algorithmic trading into its own oversight. That notice told investment firms and credit institutions to fold those expectations into risk management frameworks, with this year’s annual RTS 6 self-assessments focused on AI/ML, algorithm definitions, and direct electronic access (DEA) controls.
The AFM’s Trend Monitor chapter on capital markets states: “The rise in the use of AI increases the risk of market manipulation.”
One conclusion in the report is that manipulated information environments, not just order flow or collusion, can now move markets. The AFM cited an example of Chinese funds traded on Nasdaq that were promoted via social media and fake analyst videos to retail investors worldwide, creating a price explosion before shares were dumped.
The regulator said investors are reacting faster and more strongly to news, reinforced by “the increasing speed of information processing by trading algorithms.”
What firms should expect
In practical terms, the AFM is telling firms to show where AI sits in their trading stack, ensure models are explainable and auditable, retest algorithms after material changes, and actively report incidents. The regulator’s January 2026 agenda had already flagged AI supervision as a market-integrity priority, warning that “opaque algorithms, bias, and misleading information pose risks to consumers and markets.”
The AFM said it is also intensifying DORA-related oversight, with extra attention to incident management, outsourcing, and testing digital resilience. The regulator called for dialogue with market participants and international supervisors, reflecting the cross-border nature of the risks it identified.
