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(Bloomberg) — China should regulate quant funds and the usage of artificial intelligence, Shanghai Securities News reported, citing investors and experts after a series of roundtables hosted by the country’s securities watchdog.
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The China Securities Regulatory Commission held an “unusual number” of consultations with investors, listed companies and experts over two days this week. The meetings highlighted the need to put more oversight on quantitative trading firms, the newspaper said in a Thursday report. The outlet is founded by the Shanghai Stock Exchange but now managed by the official Xinhua News Agency.
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The report followed one of the worst setbacks for Chinese quant funds earlier this month, when steep losses rattled wealthy investors and stoked fears of bubbles in the AI‑driven stock rally. The rhetoric is more measured than the forceful steps regulators took during the quant meltdown in 2024, when they froze the accounts of a major fund and barred the trading firms from unwinding leveraged positions.
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Quant strategies have surged in popularity in recent years, with some products drawing billions of yuan within hours of release.
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The meeting readouts showed a shift in language, from the broader call of regulating the “development” of quantitative trading and AI usage in early consultations to specifically regulating the “behaviors” in later meetings. Such a shift shows that specific measures could be in the pipeline, the report said.
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The CSRC consultations were part of the country’s coordinated effort to stem the tech-led stock rout over the past month. State‑backed investment firms, part of the so‑called “National Team,” ramped up equity purchases, while several listed companies boosted buybacks, helping spark a market rebound earlier this week. The CSI 300 index rose 0.1% early on Thursday.
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Quantitative trading isn’t inherently problematic, but it must not become an “amplifier of market volatility,” the paper said. Clear boundaries on how the technology is applied are needed, the paper said, citing anonymous experts.
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Earlier in the week CSRC Chairman Wu Qing vowed to focus on preventing risks, strengthening regulation and supporting high‑quality market development. In a meeting with Canada Pension Plan Investment Board Chief Executive Officer John Graham, Wu said the watchdog would “resolutely” safeguard stable and healthy operations of the capital market and welcomes international institutional investors.
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—With assistance from Zhang Dingmin.
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English (US)