On 11 January 2024, the European Securities and Markets Authority (ESMA) announced it was launching a common supervisory action (CSA) with Member State competent authorities which will assess the implementation of pre-trade controls (PTCs) by EU investment firms using algorithmic trading techniques.

The CSA will cover:

  • Implementation of PTCs, including their calibration methodology and the use of hard and soft blocks in the design of PTCs.
  • Establishment of credit and risk limits and their interaction with PTCs.
  • Monitoring and governance framework related to PTCs.
  • Implementation and monitoring of PTCs in case of outsourcing of trading activity to third countries.