(Yicai) Feb. 21 -- The Shanghai and Shenzhen stock exchanges have suspended Chinese quant fund Ningbo Lingjun Investment Management Partnership for three days over irregular quantitative trading.

The account of Lingjun Investment was temporarily suspended from yesterday after the fund sold CNY2.6 billion (USD361.3 million) Chinese mainland shares within the first minute of trading on Feb. 19, which resulted in a short-term sharp decline in the Shanghai Composite Index and Shenzhen Component Index, disrupting normal trading order, the two bourses announced in separate statements yesterday.

Last September, the Shanghai Stock Exchange and the Shenzhen Stock Exchange released new measures to enhance the management of quantitative trading, which consists of trading strategies that rely on mathematical computations and number crunching to identify trading opportunities.

The new measures included adjusting the standards to judge abnormal trading and adding programming trade reports for selected investors using program trading methods, such as those making over 300 transactions per second or more than 20,000 transactions a day.

The measures also specified the guidelines to standardize quantitative trading, including enhancing the management of quantitative trading data, refining differentiated charging mechanisms, strengthening the supervision of leverage-type quantitative products, improving the coordination between futures and spot trading regulations, and including quantitative trading into the scope of northbound investors.

The two bourses also pledged to crack down on abnormal trading behaviors that impact securities trading prices, volume, and security, including anomalies detected in periods when many program trading transactions were recorder.

With the new policies, regulators have started paying attention to the quantitative trading algorithms behind proactive program trading, said Li Tinghan, analyst at Hwabao Securities. In the long run, the measures will benefit the healthy development of quantitative trading, as they will give legitimacy to quantitative trading by clarifying its scope and information disclosure procedure, Li added.

Editors: Liao Shumin, Futura Costaglione