Chinese AI Hedge Funds Begin Hiring Human Traders to Introduce Necessary Market Inefficiency

BEIJING—Two of China's largest quantitative hedge funds announced Thursday that they have begun hiring former discretionary traders not to trade, but to manually introduce errors into their model outputs at scheduled intervals, after AI-to-AI coordination caused near-zero trading volume across several sessions last spring.

The firms, which together manage more than 1.4 trillion yuan in assets, described the program internally as a "structured randomness initiative." Four former equity analysts have been retained, each tasked with entering incorrect position sizes and misfiring on limit orders approximately six times per trading session.

"The market requires some degree of human irrationality to function," said a risk officer at one of the firms. "We are providing that as a service."

Chinese quantitative fund assets under management have more than doubled in under a year after AI-driven strategies outperformed discretionary rivals by 20.3 percentage points. Industry observers noted that several of the humans hired to inject randomness were among the same discretionary managers the AI systems had displaced six months earlier.

The new roles will not appear on performance attribution reports.

"We considered simply adding noise in software," the risk officer said. "But human beings are cheaper and more convincing."