Hong Kong Securities and Futures Commission introduces new measures to promote digital asset trading in Hong Kong and stimulate market vitality.

On February 11, the Securities and Futures Commission of Hong Kong (SFC) issued new guidelines allowing licensed brokers offering virtual asset trading services (virtual asset brokers) to expand their services to include margin financing. At the same time, a high-level framework was established to provide guidance to virtual asset trading platforms, assisting them in providing advice on leveraged products intended for professional investors. The SFC is expanding the diversity of products and services in line with its ASPIRe roadmap. As part of the latest measures, the SFC now allows virtual asset brokers to provide virtual asset financing services to their securities margin clients, provided they have sufficient collateral and robust investor protection measures in place. This move aims to encourage margin clients with sound credit conditions and collateral to participate more actively in virtual asset trading, thereby increasing market liquidity in a controlled risk framework. For licensed virtual asset trading platforms, the SFC has introduced a high-level framework for the first time to guide them in developing perpetual contracts for leveraged products exclusively for professional investors. This is intended to assist investors in implementing risk management strategies and enhancing the liquidity of their underlying assets in the spot market. To ensure investor protection, the framework outlines the high transparency product design, clear disclosure, and robust operational monitoring measures that these leveraged products must have. To further promote virtual asset trading activities in Hong Kong, the SFC allows affiliated companies of licensed virtual asset trading platforms to act as market makers on their platforms, provided strong preventive measures are in place to mitigate conflicts of interest. The participation of these affiliated companies is expected to bring additional liquidity channels to licensed virtual asset trading platforms. Dr. Anthony Chow, Executive Director of the SFC's Intermediaries Division, stated, "We are adopting a gradual approach in line with the ASPIRe roadmap, which is crucial for the sustainable development of the digital asset market in Hong Kong. These targeted measures aim to enhance market liquidity and demonstrate our firm commitment to developing the Hong Kong digital asset market in a sustainable and collaborative manner." The SFC will continue to closely monitor the implementation of these measures and engage stakeholders to ensure they promote a safe and competitive market environment in Hong Kong.