China curbs ‘flash boys’ access to exchange data, sources say

Jan 19 (Reuters) - China's securities regulator has asked brokers to region client-dedicated servers from information centers successful section exchanges, a determination that volition deprive rapid-trading "flash boys" of an borderline against different investors, radical with cognition of the substance said.

High-frequency traders successful China person agelong utilized servers situated astatine information centers tally ​by futures and banal exchanges and owned by brokers to execute trades arsenic the carnal adjacency shaves disconnected milliseconds oregon adjacent microseconds.

The tightening measurement comes arsenic the ‌Chinese securities regulator steps up efforts to discourage marketplace speculation and support tiny investors, amid a runaway rally successful the home marketplace implicit the past year, which has triggered concerns astir different boom-and-bust cycle.

The latest determination connected ‌access to speech information centers could nonstop ripples crossed China's marketplace of high-frequency trading, which has lured overseas players including Citadel Securities and Jane Street Group.

The China Securities Regulatory Commission (CSRC) has asked brokerages successful caller weeks to region specified servers, affecting some Chinese and overseas high-frequency traders, said 1 of the radical who received the guidance.

The requirements are aimed astatine creating a level playing field, said different idiosyncratic with nonstop cognition of the development.

"Previously, you were successful the house. Now, you're being driven out. It volition apt trigger an manufacture shake-up" arsenic immoderate players volition suffer a cardinal advantage, ⁠the idiosyncratic said.

The CSRC, Citadel Securities and Jane Street did not ‌respond to Reuters’ petition for comment.

The sources did not privation to beryllium named arsenic they are not authorised to speech to media.

Bloomberg archetypal reported connected Friday, citing radical acquainted with the matter, that commodities futures exchanges successful Shanghai and Guangzhou are among those that person ordered section brokers ‍to displacement servers for their clients retired of information centers tally by the bourses.

The sources told Reuters the guidance applies to each large exchanges overseen by the CSRC, including commodities futures exchanges and banal exchanges.

China’s large futures exchanges are based successful Shanghai, Dalian, Zhengzhou and Guangzhou.

Shanghai, Dalian, Zhengzhou and Guangzhou exchanges did not instantly reply to Reuters requests for comment.

'FAIR TRADING CONDITIONS'

China’s benchmark Shanghai Composite Index scaled decade-highs ​last week arsenic turnover and leverage trades deed records. Some companies, particularly those from the AI and semiconductor sectors, jumped arsenic overmuch arsenic 700% successful their section marketplace debuts ‌in caller weeks.