The activities of some hedge funds and brokerages engaged in quantitative trading have attracted the attention of Chinese financial markets regulator The China Securities Regulatory Commission (CSRC), according to a report by Reuters.
The report cites tow unnamed sources with knowledge of the matter as conferring that, with China’s stock market continuing to struggle, the CSRC has begun looking into the short-selling trading strategies of quant funds amid a growing unrest at their ability too take money from falling share prices and market volatility.
According to one Reuters source, the Shanghai and Shenzhen stock exchanges, under the guidance of the CSRC, have also requested information from major quant funds on their trading strategies.
A number of global quant fund managers including Winton and Two Sigma currently operate in China, but it’s not certain of foreign funds are part of the CSRC probe.
The report cites a report compiled by Huatai Securities and other financial institutions as revealing that quant funds in China exceeded RMB1.08tn ($147.94bn) at the end of 2021, almost double their size 12 months earlier.