(Yicai) Jan. 4 -- Regulation on quantitative trading of Chinese futures is becoming stricter but the recent rumor of a marketwide suspension is not true, insiders said to Yicai today.

"We noticed this rumor today, but we have not yet been officially notified," a quant analyst said to Yicai. “This year, there indeed are signs of stricter regulations.”

Quantitative trading relies on mathematical models and statistics to remove emotional factors from decision-making but a large number of quant traders on the market are likely to intensify big asset price fluctuations.

Quant trading accounts for a large proportion of China’s futures market so a complete suspension is not realistic but ultra-high frequency deals could be restricted, another insider said.

"The rumor might stem from misunderstandings about market policies," Zhang Xiaowei, deputy general manager of the Shanghai branch of Galaxy Futures, said to Yicai. Still, what is under discussion is a possible cancellation of refunds of handling fees, the vice GM added.

Futures exchanges in China tend to refund some handling fees to make the derivatives market more active. However, if such refunds are canceled it would greatly impact some institutions that engage in high-frequency trading, Zhang said, adding that the refunds are one of the major profit sources for these institutions.

Editors: Dou Shicong, Emmi Laine