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China punishes hedge fund for high-frequency trading in index futures as it broadens crackdown on quant investments
- Regulators slapped a trading suspension and fines on Shanghai Weiwan Private Fund Management for high-frequency trading in index-futures contracts
- It underscores the intensifying of a regulatory campaign aimed at reining in trading activities deemed to be harming the nation’s stock market
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Zhang Shidongin Shanghai
China has slapped a trading suspension and fines on a hedge fund firm for high-frequency trading in index-futures contracts, signalling that a crackdown on so-called quantitative investments has widened to financial derivatives from stocks.
Shanghai Weiwan Private Fund Management will be banned from opening index futures contracts for 12 months and have 8.93 million (US$1.24million) in “ill-gotten gains” confiscated, the China Financial Futures Exchange said in a statement posted on its website on Wednesday night.
The asset manager carried out trading in multiple index-futures products that exceeded limits and used “inappropriate means” to bypass the rules set by the exchange, the bourse said in its statement.
It also failed to disclose the links between three corporate accounts and two retail accounts belonging to the owner and his relative, it said.
The exchange will continue to strengthen its oversight of the market to clamp down on wrongdoings, it added.
The episode underscores the intensifying of a regulatory campaign aimed at reining in trading activities deemed by the securities watchdog as disruptive to the nation’s yuan-denominated stock market.
The Shanghai Stock Exchange last week penalised a quant hedge fund for offloading stocks via quantitative trading, about two weeks after Beijing appointed a new chief to helm the stock market’s regulatory body.
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