Hong Kong Securities and Futures Commission first subscribed to the perpetual contract high-level framework, only to be sold to professional investors.

The Securities and Futures Commission of Hong Kong has established a high-level framework for the first time, guiding licensed virtual asset trading platforms to offer perpetual contracts with leverage products to professional investors, assisting investors in implementing risk management strategies, and enhancing the liquidity of relevant assets in the spot market. To ensure investor protection, the framework outlines the high transparency product design, clear disclosure, and robust operational monitoring measures required for these leverage products. The Securities and Futures Commission of Hong Kong emphasizes that the opening of perpetual contracts is intended to assist investors in implementing risk management strategies and enhancing the liquidity of relevant assets in the spot market, rather than encouraging speculation. As perpetual contracts are a relatively new financial instrument in Hong Kong and their risks differ from traditional products, the framework clarifies that perpetual contracts can only be offered to professional investors, and the reference assets must be virtual assets that are already approved for retail clients to trade spot on the platform, or an index that complies with the International Organization of Securities Commissions (IOSCO) financial benchmark principles. The reference assets for perpetual contracts can be virtual assets that retail clients can trade spot on the platform operator's platform, or a virtual asset index managed by a manager that complies with the IOSCO's Principles for Financial Benchmarks. When the platform operator suspends trading of the reference asset of a perpetual contract on the platform, trading of that perpetual contract is generally expected to be suspended as well. The framework strictly prohibits platforms from providing any form of credit for margin, and margin must be paid in fiat currency, stablecoins regulated by the Hong Kong Monetary Authority, or tokenized deposits. In addition, platform operators should provide real-time disclosure in a clear, accurate, and non-misleading manner of the level of the insurance fund available to absorb losses. It is worth noting that platform operators are responsible for the settlement of all trades conducted on their platform, regardless of whether they are parties to such trades, and platforms should also have a clear loss-sharing mechanism in place. The Securities and Futures Commission of Hong Kong points out that the design and operation of perpetual contracts may bring unique financial risks to clients. The funding rate and calculation of position value, margin operations, and liquidation mechanisms directly determine how client positions are managed and losses are absorbed. Without sound and transparent mechanisms, clients may incur unexpected losses or be unfairly liquidated. Therefore, comprehensive monitoring measures and transparent procedures are necessary to maintain market integrity and protect client interests.