Lingjun Investment is restricted from quantitative trading and strong regulatory signals are released at an accelerated pace
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In recent times, strong regulatory signals have been continuously released in the field of quantitative investment. The Shanghai and Shenzhen Stock Exchanges recently emphasized that they will establish and improve quantitative trading supervision arrangements, including strictly implementing the reporting system, clarifying the “report first, then trade” access arrangement, and strengthening supervision of abnormal transactions and abnormal order cancellations. On the same day, the quantitative investment institution Ningbo Lingjun Investment Management Partnership (Limited Partnership) (referred to as “Ningbo Lingjun” or “Lingjun Investment”) was subject to regulatory measures to restrict transactions, which attracted widespread market attention.
According to industry insiders, clear regulatory policies can provide clear guidance for the quantitative investment industry, promote self-discipline and self-management within the industry, and promote the healthy and orderly development of the industry.
Lingjun Investment was taken to restrict transactions
Recently, due to the short-term large-scale selling of stocks, Ningbo Lingjun was subject to regulatory measures to restrict trading by both the Shanghai and Shenzhen exchanges from the 20th to the 22nd.
According to the official WeChat account of the Shanghai Stock Exchange, on February 19, the Shanghai Stock Exchange discovered during transaction monitoring that from 9:30:00 to 9:31:00, multiple products managed by Ningbo Lingjun sold a large amount of Shanghai stock stocks totaling 1.195 billion yuan. During this period The Shanghai Composite Index fell rapidly in a short period of time.
It was found that the above-mentioned transactions in Ningbo Lingjun violated Article 7.2 (6) of the “Shanghai Stock Exchange Trading Rules”, which “automatically generates or issues trading instructions through computer programs to conduct programmed transactions, affecting the security of the Shanghai Stock Exchange system or the normal trading order.” “Regulation. According to relevant regulations, the Shanghai Stock Exchange decided to continuously implement regulatory measures to suspend investor account transactions for related products managed by Ningbo Lingjun from February 20, 2024 to February 22, 2024, that is, to suspend related product accounts during the above period. All stock transactions listed on the Shanghai Stock Exchange will also initiate disciplinary proceedings for Ningbo Lingjun to be publicly condemned.
The official Weibo account of the Shenzhen Stock Exchange also showed that on February 19, the Shenzhen Stock Exchange discovered during transaction monitoring that from 9:30:00 to 9:30:42, multiple securities accounts under the name of Ningbo Lingjun Investment Management Partnership (Limited Partnership) passed through the computer The program automatically generated trading instructions, placed a large number of orders in a short period of time, and sold a total of 1.372 billion yuan of Shenzhen Stock Exchange stocks. During this period, the Shenzhen Stock Exchange Component Index fell rapidly, affecting the normal trading order, and constituted Article 6.2 of the “Shenzhen Stock Exchange Trading Rules” Abnormal trading behavior specified in Article 6.
According to relevant regulations, the Shenzhen Stock Exchange decided to adopt trading restrictions on the relevant securities accounts under Ningbo Lingjun’s name from February 20, 2024 to February 22, 2024, restricting its trading in securities listed on the Shenzhen Stock Exchange during the above period. All stocks, and initiated the process of public condemnation and disciplinary action against Ningbo Lingjun.
After the regulatory measures were taken, Lingjun Investment subsequently issued a response announcement. The announcement stated that the company attaches great importance to the problems existing in product transactions and has conducted deep introspection and review internally. On February 19, 2024, the company’s management products had an overall net purchase of 187 million yuan throughout the day. However, the trading volume was large within one minute of the opening of the day. The company sincerely apologizes for the negative impact caused.
Supervise “combination boxing” to standardize the development of quantitative fields
The regulatory measures implemented by the Shanghai and Shenzhen Stock Exchanges on Ningbo Lingjun have released a strong regulatory signal for the quantitative investment field. In fact, in recent times, securities regulatory authorities have frequently spoken out in this area. In the future, a series of measures for quantitative trading supervision are also expected to be introduced one after another.
On February 20, the Shanghai and Shenzhen exchanges stated that the previously established special reporting system for quantitative trading has been implemented smoothly, and the quality of reports from all parties generally meets the requirements, laying the foundation for further strengthening and improving the supervision of quantitative trading. In the future, the exchange will continue to strengthen the monitoring and analysis of quantitative trading, especially high-frequency trading, based on the report information, and dynamically evaluate and improve the reporting system.
Relevant persons from the Market Supervision Department of the China Securities Regulatory Commission said that the China Securities Regulatory Commission has always paid attention to the development and supervision of quantitative trading, and has successively promoted many tasks in recent years, including including quantitative trading within the scope of securities laws, establishing a data collection mechanism for leading quantitative institutions, strengthening Quantitative transaction monitoring and analysis, establishing a programmed transaction reporting system, strengthening private placement and securities lending supervision, etc. The quantitative trading supervision “combination” launched this time is strong, strengthening supervision from multiple dimensions, and basically covering the main aspects of quantitative trading business operations.
“The Shanghai and Shenzhen Stock Exchanges have implemented comprehensive policies to supervise quantitative trading, not to kill quantitative trading with one stick, nor to ban quantitative trading, but to find that during the daily supervision process, quantitative trading has more frequent transactions, orders and cancellations. When the frequency is too high, there are phenomena such as excessive use of information advantages and aggravation of information asymmetry, which brings increasingly obvious unfairness to the market,” the person emphasized.
“Quantitative trading, due to its high leverage and high risk characteristics, and its trading advantages over ordinary small and medium-sized investors, can easily cause violent market fluctuations and cause wealth losses for small and medium-sized investors. Strengthening the supervision of quantitative trading can practice investor-oriented A new concept of financial development with Chinese characteristics; it can promote market fairness and protect the interests of small and medium-sized investors; enhance market transparency and promote stable market development; standardize financial innovation and guide the healthy development of the quantitative investment industry.” Vice President of Guangxi University, Financial Development of Nankai University Tian Lihui, president of the institute, told a reporter from the Economic Information Daily that by strengthening supervision, information in the market will be more open and transparent, reducing information asymmetry, allowing investors to make investment decisions based on more authentic and comprehensive information. Provide a strong guarantee for the smooth operation of the economy.
Continue to establish and improve regulatory arrangements for quantitative trading
In recent years, with the widespread use of new information technology, quantitative trading has become an important trading method. Quantitative trading helps provide liquidity to the market and facilitates price discovery. However, quantitative trading, especially high-frequency trading, has obvious technical, information and speed advantages over small and medium-sized investors. At some points, there are also problems such as strategic convergence and trading resonance, which increase market volatility.
In fact, judging from international experience, overseas markets generally implement stricter supervision on quantitative transactions, especially high-frequency transactions, to prevent negative impacts on market order. According to industry insiders, clear regulatory policies can provide clear guidance for the quantitative investment industry, promote self-discipline and self-management within the industry, and promote the healthy and orderly development of the industry.
“In order to promote further standardized development in the field of quantitative investment, it is necessary to continuously improve the regulatory system, strengthen technical supervision, promote industry self-discipline, establish an information sharing mechanism, and strengthen investor education.” Tian Lihui said that based on the existing regulatory basis, On the other hand, more specific regulatory standards can be formulated, and the identification and handling of violations can be clarified; at the same time, regulatory authorities can maintain close cooperation with technology providers to jointly study and formulate regulatory measures to adapt to the development of new technologies; it is also necessary to strengthen the cooperation between relevant departments. Information sharing and collaboration among the parties will form a joint force to jointly crack down on cross-market and cross-variety illegal transactions.
Talking about the next work arrangements, the Shanghai and Shenzhen Stock Exchanges emphasized that they will adhere to the investor-oriented principle, take the maintenance of fairness as the starting point and goal of the work, learn from international regulatory practices, seek advantages and avoid disadvantages, and establish and improve quantitative trading supervision arrangements, including Strictly implement the reporting system and clarify the access arrangements of “report first, trade later”; strengthen the authorization management of quantitative trading quotations, and improve the differentiated charging mechanism; improve the monitoring and control standards for abnormal transactions, strengthen the supervision of abnormal transactions and abnormal order withdrawals; strengthen the supervision of abnormal transactions and abnormal order cancellations; Monitor and regulate leveraged quantitative products, and strengthen joint supervision of futures and spot prices. At the same time, it will also further consolidate the customer management responsibilities of securities companies, improve the self-regulatory management cooperation mechanism with the Securities Industry Association and the Fund Industry Association, and strengthen the transaction supervision of quantitative private equity and other institutions.
“The series of quantitative trading supervision measures introduced in the next stage will be matured one by one and launched one by one. We will fully strengthen communication with various investors in the market, grasp the pace and intensity of work, promote the standardized and healthy development of quantitative trading, and maintain market stability. Operation.” said a relevant person from the Market Supervision Department of the China Securities Regulatory Commission.
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