Wednesday, June 21, 2017

Regulators Are Probing Renaissance Technologies' "Secret Trading Code"

From ZeroHedge:
With the world's most mysterious, and profitable, quant fund - Renaissance Technologies - recently finding itself in an unfamiliar place: under the harsh public spotlight, and worse - in the context of its co-CEO Robert Mercer's questionable political support of Donald Trump - we wondered one month ago how long before regulators start sniffing around to uncover the "secret sauce" that has generated some $60 billion in profits for LPs of the giant money-making machine. The answer: a few weeks.

According to the NY Post, regulators from the Commodity Futures Trading Commission are probing the "secret trading code" at RenTec run by Democrat, and Hillary Clinton supporter, James Simons and Republican and Trump's most influential financial backer, Robert Mercer.

The CFTC has reportedly asked to dig into the trading software at the $65 billion hedge fund, "James Rowan, the fund’s chief operating officer, told an audience of hedge fund managers on Tuesday in New York, according to two people who were in the audience." But, like every other secretive quant fund, RenTec is pushing back against the CFTC’s request out of fear that the code will “leak,” Rowan told the managers, according to those present.
Jonathan Hitchon, chief operating officer of quantitative hedge fund Two Sigma, which manages an estimated $40 billion, was also on the panel echoing Rowan’s concerns. Hitchon is on the board of the Managed Funds Association, which called out the CFTC for “overreaching in its authority” in a letter sent last month.
The push by the CFTC to expose the trading code of the world's most popular quant fund comes as a time when investors are increasingly on edge about the threat of passive investing in a one-way market, with lingering questions about what might happen if all the quants start selling at the same time....MUCH MORE