China's fund penalised: China's stock exchanges have suspended major quant fund Lingjun Investment from trading for three days due to rule violations, part of broader regulatory actions to restore market confidence.

Lingjun's selling orders on Monday coincided with sharp market declines, prompting the Shenzhen and Shanghai stock exchanges to restrict trading until February 22.

As one of China's largest quant funds, managing over 60 billion yuan ($8.34 billion), Lingjun's penalty underscores regulators' push for long-term investment focus over short-term gains.

While the trading halt may not significantly impact Lingjun, it further shakes confidence in quant funds amid increased regulatory scrutiny.

Violating trading rules 

The exchanges cited Lingjun's dumping of shares through multiple products, which violated trading rules and endangered normal trading orders.

Regulators aim to strengthen monitoring of quantitative, especially high-frequency trading, which can amplify market volatility.

Chinese quant funds faced scrutiny last year for their role in market fluctuations, attracting criticism from smaller investors and traditional funds.

The industry, totaling 1.26 trillion yuan at the end of 2021, has grown rapidly and attracted foreign players like Two Sigma and Winton, but faces increasing regulatory oversight.

(with Reuters inputs)