###香港证监会发布新监管框架 How significant is the impact of the new regulatory framework announced by the Hong Kong Securities and Futures Commission?

On April 20, the Hong Kong Securities and Futures Commission (SFC) announced a new regulatory framework, promoting the trial of secondary market trading of tokenized Hong Kong Securities and Futures Commission-approved investment products (referred to as "tokenized products") in Hong Kong. The relevant documents cover the operation of trading channels, fair pricing, liquidity provision, disclosures, client account opening, and notifications, aiming to support a fair and orderly secondary market for tokenized products.

Since the SFC first outlined a regulatory framework for tokenization at the end of 2023, Hong Kong product issuers have been actively working toward tokenizing their products. As of March 2026, 13 tokenized products have been offered to the Hong Kong public, with the total managed assets of tokenized category shares increasing approximately sevenfold over the past year to HKD 10.7 billion. The SFC believes that "promoting round-the-clock secondary market trading is timely."

In a recent speech on advancing Hong Kong’s digital asset development, SFC Executive Director of Intermediaries, Ye Zhi Heng, conveyed two clear messages: first, that efforts under ASPIRe should be focused and methodical; second, that the focus should shift from local grounding to leveraging global influence to attract international liquidity, demonstrating that robust risk management can coexist with responsible innovation.

Allowing secondary market trading of tokenized products
On November 2, 2023, the SFC issued two circulars ("Circular on Tokenized Hong Kong Securities and Futures Commission-Approved Investment Products" and "Circular on Activities of Intermediaries Engaging in Tokenized Securities"), establishing a regulatory framework for tokenized products and securities-related activities.

To promote further development and enhance market scalability, the SFC announced that tokenized products can now be traded in the secondary market to improve their liquidity and integrate further into Hong Kong’s Web3.0 ecosystem.

The main purpose of this move is to facilitate secondary market trading of tokenized products on licensed virtual asset trading platforms, expanding regulated trading services available to retail investors.

It is expected that the initial products will mainly be tokenized money market funds. However, the SFC will consider, where appropriate, including through revised regulations, other types of products, and may also consider arrangements for over-the-counter (OTC) secondary market trading. Additionally, the SFC encourages product issuers and licensed virtual asset trading platforms ("licensed platforms") to consult or notify the SFC before engaging in activities related to this regulatory framework.

SFC Chief Executive Julia Leung stated: "The new regulatory framework marks another important milestone in building Hong Kong’s digital asset ecosystem. This comprehensive ecosystem will be innovative and scalable, while providing robust investor protection. The new measures allow traditional securities products to be traded after tokenization during nighttime and weekends, and promote round-the-clock liquidity through the use of regulated stablecoins and tokenized deposits, addressing investor needs in an increasingly fast-changing and uncertain market environment."

Focusing on fair pricing and ample liquidity
The latest regulations stipulate that retail investors can buy and sell tokenized products in the secondary market via licensed trading platforms (i.e., automated trading on screens). These platforms should only execute trades when the client’s account has sufficient funds or holdings of equivalent interchangeable products.

Product providers must also ensure that their products comply with applicable rules, regulations, and product codes, and collaborate with licensed platforms to test trading arrangements before launching.

Regarding fair pricing, the SFC emphasizes that licensed platforms should implement effective risk management and supervisory measures to ensure fair pricing of tokenized products on the platform. Such measures should include warning investors when the proposed transaction price deviates significantly; informing investors that they can subscribe or redeem in the primary market instead of trading in the secondary market. Monitoring measures should also be in place to prevent excessive price volatility, market manipulation, and to identify suspicious activities or violations.

To ensure liquidity, the SFC requires product providers to make every effort to have at least one market maker for each tokenized product; closely monitor secondary market trading activity and liquidity; be prepared to develop contingency plans with market makers; and ensure that distributors are licensed or registered entities capable of handling subscription and redemption requests from third-party investors. Facilitating transfers between primary and secondary markets for tokenized products is also encouraged.

Licensed platforms must conduct due diligence on all market makers authorized on their platform and regularly monitor their performance; ensure that all market makers comply with standards regarding bid-ask spreads, quote values, minimum quote duration, and participation rates; and promptly address any non-compliance.

In addition, the SFC has set out disclosure rules for relevant tokenized products and procedures for notifications in special circumstances.

Clear application approval requirements
According to the SFC, product providers intending to introduce new investment products with tokenization features (primary and/or secondary market trading) that require SFC approval must consult the SFC beforehand; existing approved products seeking to add tokenization features must also seek prior approval.

The SFC states that each application will be assessed on a case-by-case basis. Given the evolving nature of the tokenization market, further guidance or additional requirements may be issued when appropriate. For previously approved secondary market trading arrangements, providers should consult the SFC before making any significant subsequent changes.

Intermediaries engaged in secondary market trading of tokenized products (including licensed platforms and those planning OTC secondary trading) must notify their case officer at the SFC before commencing such activities. If they make significant modifications to arrangements previously discussed, they should also notify their case officer and the Hong Kong Monetary Authority.