On Apr. 12, CHI CSRC proposed rules on administering quant trading.
CHI CSRC proposed draftRegulations on the administration of quantitative trading in the securities market (trial), to maintain order of securities trading, market fairness.
Clearly define the purpose of formulating the regulations and scope of application, overall requirements such as following principles of fairness, division of responsibility.
Put forward reporting requirements; stock exchanges should establish a quant trading reporting system, reports should include information on accounts, funds, and software.
Clients of securities firms should report to the respective firm; upon verification, the securities firm will confirm with the client and report the trade to the stock exchange.
Stock exchanges shall implement focused monitoring, stipulate standards for abnormal trading behaviors such as rapid order cancellations and abnormal market operations.
Securities firms should sign agreements with clients to strengthen monitoring of clients' quant trading behavior, cooperate with stock exchanges in taking relevant measures.
In response to emergencies, quant trading investors, securities companies, and stock exchanges should promptly take measures such as suspension of trading.
Regulations also clarify the technical system requirements for quant trading; firms should incorporate trade information system access into their compliance risk control.
Defines high-frequency trading and clarify differentiated management requirements.
Stock Exchanges
SSE and SZSE said they would implement the regulatory requirements set forth in the regulations, formulate supporting self-discipline supervision rules as soon as possible.
Improve monitoring for abnormal transactions, encourage reporting of quant trading.
As well as strengthen the management of high-frequency trading investors.
Effectiveness
Consultation is open until Apr. 27, 2024.
May 2024 Regulations Published
On May 15, 2024, CHI CSRC published regulations to implement quantitative trading supervision; emphasize fairness, effective supervision, and standardized development.
The regulations will be effective from Oct. 8, 2024.
In Jun. 2024, SSE drafted rules on quantitative securities trading, see #215271.
Jul. 2024 Press Conference
On Jul. 10, 2024, CHI CSRC issued answers to press re quantitative trading supervision.
CHI CSRC plans to implement further practical measures under the new guidelines, emphasizing risk management, fairness, strict supervision, and market integrity.
This includes refining detailed implementation rules for algorithmic trading, enhancing reporting systems, setting standards for the monitoring of abnormal trading.
As well as coordinating with Hong Kong on regulatory matters, and exploring differentiated fee structures for high-frequency trading to balance market interests.
Jul. 16, 2024 SSE Answer to Press
On Jul. 16, 2024, SSE, SZSE responded to concerns about inconsistent fee standards for high-frequency trading raised by foreign institutions as they explore fee schemes.
The exchanges are enhancing quant trading supervision and researching differentiated fee schemes, while ensuring fairness for both domestic and foreign institutions.
They aim to apply a consistent principle, treating all market participants equally, and improve fee mechanisms based on comprehensive assessments.
Opinions will be solicited; fee arrangements will be implemented gradually, smoothly.
