Liu Jipeng: Recommends Providing Retail Investors with T+0 and Institutions with T+1 to Curb Excessive Harvesting by Institutions Using System Advantages

Special Topic: Strengthening the Defense Line for the Rights and Interests of Small and Medium Investors — Sina Finance 3.15 Investor Protection Forum

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On March 13, Sina Finance held the 3.15 Investor Protection Forum, featuring a keynote speech by Liu Jipeng, Professor at the Business School of China University of Political Science and Law and a renowned expert in capital markets.

When discussing the market impact of quantitative trading, Liu Jipeng pointed out that the core of quantitative trading is the word “fast”: on one hand, the speed of information acquisition—ideally, information should be fair and open, but if I get the information before you, I can act first; on the other hand, it’s the execution speed—placing orders faster than others. Quantitative firms can place servers directly in exchange data centers to gain ultra-fast advantages, which ordinary retail investors obviously cannot do. Additionally, institutions can use margin trading, futures, and various index derivatives to short-sell, while retail investors find it difficult to participate.

Against this backdrop, building a fairer market mechanism has become an urgent issue. Liu Jipeng suggested that since we emphasize protecting small and medium investors, especially the broad retail group, could we, under current national conditions, provide them with some moderate special considerations? Of course, this is not an unrealistic wish. He cited India as an example, where differentiated trading systems are implemented—T+3 for institutions and T+0 for retail investors. If we could also offer T+0 for retail investors and T+1 for institutions, the goal would be to curb behaviors in the secondary market that exploit speed advantages to frequently wipe out retail investors.

It is worth noting that regulatory authorities have already taken action, such as requiring quantitative firms to move servers out of exchange data centers to weaken their physical advantages. However, Liu Jipeng also pointed out that there are now phenomena like real estate value appreciation around exchanges, because the closer physically, even by a fraction of a second, the more unfair advantage one can gain.

Therefore, Liu Jipeng suggested engaging in in-depth discussions with senior executives of quantitative firms—learning from their high-tech methods, adopting their essence, while ensuring that market rules can uphold fairness and that technological progress truly benefits the entire market.

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Editor: Chang Fuqiang