Some hedge funds that had short positions in stock-index futures and long positions in equities were unable to sell their shares fast enough on Friday to meet futures margin calls because of exchange issues that led to order delays.
The Shanghai Stock Exchange ran weekend stress tests and traders braced for a potentially volatile session on Monday after transaction problems at the end of last week wrongfooted a number of quantitative hedge funds.
The exchange asked brokerages to participate in the tests after its systems struggled to cope with a surge in trading activity on Friday as stocks soared. The exchange processed 270 million transactions in the weekend simulations, twice as many as the previous peak and three times the orders placed on Friday, it said in a statement.
