Shenwan Hongyuan readies A.I.-driven fund

The asset-management arm of Shenwan Hongyuan, a China-based securities broker, is piloting artificial-intelligence services from Squared-S.

Shenwan Hongyuan is reportedly launching an A.I.-driven fund. Squared-S has signed an agreement to be its partner “to collaborate on the technology”, said one of the fintech’s partners, Seth Huang. He declined to comment on how the broker is planning to use Squared-S’s software.

A second hedge fund based in Hong Kong is also testing Squared-S’s tools, Huang said, declining to name the client.

That brings the number of beta users of Squared-S’s asset-allocation tools to four, joining the Hong Kong arm of Korea’s Mirae Asset Global and the business school of Hong Kong University of Science and Technology, as previously reported by DigFin.

“The development has finished and is in the testing process,” said Huang. The software helps portfolio managers control volatility, correlations, leverage and other risk factors. (Read our original article for more depth on Squared-S’s A.I.)

Huang says Squared-S is still working on adding a fraud detection function into this tool and is now in reinforcement learning process. “We want to be the AlphaGo in the financial industry for large-scale deployment,” he said, referring to the Google-backed company whose A.I. famously defeated world Go champion Lee Sedol.

The firm was seeking seed funding when they last talked to Digfin. Huang now says the partners are still engaging with different VCs to secure $2 million to $3 million for further R&D.

Huang says the next step for commercialization is to focus on greater China and Southeast Asia, especially Singapore: “Almost all the hedge funds are headquartered in Singapore,” he explained.