The use of algorithms in energy trading on wholesale markets for electricity and natural gas has significantly risen, driven by the energy transition and the unpredictability of renewable energy sources. This growth includes a surge in pure algorithmic traders who base their business model on algorithmic trading.

ACM and AFM conducted an exploratory market study to assess the impact of algorithmic trading on energy markets. While algorithmic trading can enhance price formation efficiency and market liquidity, it also poses risks such as market manipulation. Recent regulations have been tightened to ensure compliance with transparency and integrity rules.

Businesses using algorithms in energy trading must ensure system resilience, prevent market disruptions, and avoid illegal trading activities. They are required to document algorithm development and usage for five years, inform regulators, and comply with the revised REMIT regulation.

ACM has the authority to request information on algorithmic trading from businesses and collaborate closely with AFM to enforce market integrity. Non-compliance with rules may result in fines, as stipulated in the REMIT regulation that came into force in May 2024.

The exploratory market study revealed a continuous increase in algorithm usage by energy traders, with a focus on rule-based and self-learning algorithms. While traders acknowledge the benefits of algorithms, they also recognize associated risks such as volatility and market manipulation.