China's Public Anger Grows as Market Weakness Puts Quant Strategies Under Scrutiny

Chinese regulators are investigating hedge funds and brokerages that employ quantitative trading strategies, as public anger grows over the ability of these funds to profit from market downturns and volatility. The China Securities Regulatory Commission (CSRC) has been inquiring about short-selling activities and trading strategies of major brokers and quant clients, while the Shanghai and Shenzhen stock exchanges have requested information from quant funds on their money-making strategies. The scrutiny comes amid a struggling stock market and criticism from fund managers and retail investors. Regulators may tighten regulations on short-selling and certain financing activities by hedge funds as a result of the probes.