TIANYAN Capital has become the latest hedge fund manager in China to limit the size of its quantitative investment business, after China’s top securities regulator advised bourses to pay attention to the explosive growth of quant funds.

Tianyan Capital, which employs fast computers that use mathematical and statistical analyses to trade, said it had suspended fresh fundraising Sept. 7 after prudent considerations.

“Recently, the company has actively curbed growth in assets under management [AUM] using various methods, but we think we’re still growing too fast,” Tianyan said Tuesday.

The fundraising suspension is aimed at safeguarding investors’ interest and “managing the size cautiously has become a key part of our long-term success,” said Tianyan, whose AUM has tripled so far this year to 30 billion yuan (US$4.64 billion), according to its website.

A Shanghai-based official of the company confirmed that quant fundraising had been suspended, but declined to say if the decision was a result of pressure from regulators.

Tianyan’s decision came days after rival quant fund manager Evolution Asset Management announced it would not launch new quant products this year, and suspended fundraising in some existing funds.

Another hedge fund manager, Starvast, made a similar announcement in late August in a bid to manage its pace of growth.

Yi Huiman, chairman of the China Securities Regulatory Commission, said Monday the rapidly growing number of quantitative trading was a challenge to China’s stock exchanges.

Quants, as traders and funds that engage in such trading are known, employ fast computers that use mathematical and statistical analyses to trade.

In mature markets, such quantitative and high-frequency trading had led to better liquidity, but also fueled herd behavior, greater volatility and unfairness, he added. (SD-Agencies)