T+0 algorithm trading suspended for one day? The truth is... multiple suppliers have notified us to resume market | trading | algorithms from now on

On August 28th, the news of securities firms suspending T+0 algorithm trading sparked heated discussions in the market.

According to multiple interviews conducted by Chinese journalists from securities firms, it has been reported that multiple securities firms have suspended T+0 algorithm trading services for the entire day on Monday, in response to notifications from third-party software suppliers. Many securities firms have also stated that they have never suspended T+0 services, but suppliers have advised customers not to engage in related transactions due to concerns about unilateral market trends.

As of 10pm on August 28th, according to feedback from securities firms, most suppliers, including Chi Fang Technology and Non convex Technology, have notified securities firms to resume T+0 related algorithm services from August 29th after Monday's closing. However, there are still some suppliers who advise customers not to use these services temporarily.

Multiple suppliers have notified securities firms to suspend for one day

According to a reporter from China Securities, many securities firms notified customers on Monday to suspend T+0 algorithm services. However, the source of the suspension lies with financial software suppliers, rather than the voluntary or regulatory will of securities firms.

Previously, after the news of the halving of stamp duty was announced, in order to prevent significant market fluctuations after the market opened on August 28th, some trading software suppliers notified securities firms on the evening of August 27th to suspend the quantitative T+0 algorithm service on August 28th, and whether to resume service on August 29th, etc. After the closing of August 28th, they will consider and notify them comprehensively.

A financial product salesperson from a large securities firm in Shanghai told a Chinese journalist that the so-called T+0 algorithm trading is actually intraday reversal trading.

According to its introduction, there are two main reasons for suspending trading tools such as intraday rotation on Monday: firstly, mainstream algorithm strategies are AI models trained on historical data, which are prone to failure due to tail risk in the event of rare historical events; On the other hand, there is a high possibility of a unilateral market trend in the expected market, and there is a high risk of reversal trading.

The above sources introduce that generally speaking, there are many independent algorithm providers on the market, and the algorithm bus platform of securities firms is often built by securities firms themselves, which will connect many third-party algorithm providers and securities firms' self-developed algorithms, which is a value-added service for trading. Institutional investors can embed algorithms in securities trading clients, and may also involve different clients and algorithm providers. On Monday, the main focus was on the suspension of tools such as intraday rotation by independent suppliers.

Another person from the Shanghai branch of a securities firm stated that they have indeed received notifications from multiple suppliers to suspend T+0 services, and the resumption time is still waiting for notification.

Some securities firms claim that they are only suggesting a suspension

However, several securities dealers have also provided feedback to Chinese journalists from securities firms that their securities firms have never suspended T+0 trading. Based on historical market conditions, they suggest that relevant customers be cautious and not engage in T+0 trading.

A business representative from a large securities firm headquartered in South China told a reporter from the securities firm China that due to the recent reduction of stamp duty and handling fees, there is a risk of instability in some independent financial IT supplier systems after upgrading. Therefore, the company's business personnel will advise relevant customers to be cautious and try not to conduct T+0 transactions on August 28th.

"Some third-party software suppliers are concerned that the market may form a unilateral market trend on Monday. Out of concern for customers, they suggest that customers using their systems temporarily suspend T+0 trading for a day, which is a suggestion rather than a mandatory one. Investors can decide whether to implement their own strategies based on their own judgment of the market." The general manager of a small and medium-sized securities firm in Shanghai told a reporter from the securities firm in China.

Some suppliers have resumed T+0 transaction services

When will the T+0 algorithm service resume? According to multiple verifications by Chinese journalists from securities firms, as of 10pm on the 28th, algorithm suppliers including Chi Fang Technology and Non Convex Technology have notified securities firms to resume T+0 trading from August 29th, but there are still some suppliers that have not resumed.

It is worth mentioning that some top or large and medium-sized quantitative private equity firms have high technical requirements and often use self-developed systems instead of using the T+0 algorithm provided by securities firms for trading. This has led to many large and medium-sized quantitative institutions providing external feedback and not receiving any relevant notifications from securities firms in the past two days.

It is not suitable to do T+0 under unilateral market conditions

According to an interview with a Chinese journalist from a securities firm, it is not suitable to do T+0 under unilateral market conditions, which is the main reason for the suspension of T+0 algorithm trading this time.

"T+0 itself is also taking advantage of the trend. It is not easy to do T+0 in a unilateral market. If it rises unilaterally, then it is better to hold it," an IT insider from a securities firm told a Chinese journalist.

"I heard that the T+0 team will deliberately be cautious today to prevent unilateral trends from causing overnight exposure," said the founder of a medium-sized quantitative private equity firm in Shanghai.

Huabao Securities Metal Industry analyst Li Tinghan pointed out that the T+0 strategy has a relatively short holding time. Based on the judgment of the future short-term stock price trend, buy at a low price and sell at a high price to obtain price difference returns. The buy sell transaction is completed within the day.

It is reported that the time for the T+0 strategy to enter China is relatively short, mainly due to differences in trading rules between the US stock market and the A-share market. The US stock market adopts the "T+0" trading system, where stocks can be sold on the day of purchase, while the A-share market adopts the "T+1" trading system, which means stocks can be sold on the second day after purchase. In order to match the domestic trading system, the T+0 strategy uses tools such as margin trading, short selling, and stock index futures to indirectly achieve T+0 trading.