Hong Kong Securities and Futures Commission opens licensed virtual brokers to provide margin financing

On February 11, the Hong Kong Securities and Futures Commission (SFC) issued new guidelines allowing licensed virtual asset brokers (virtual asset brokers) to expand their related 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 developing recommendations for virtual asset leveraged products intended for professional investors. The SFC is expanding product and service diversity in line with its ASPIRe roadmap. As one of the latest measures, the SFC now permits virtual asset brokers to offer virtual asset financing services to their securities margin clients, provided they have sufficient collateral and robust investor protection measures. This move aims to encourage margin clients with sound credit profiles and collateral to participate more actively in virtual asset trading, thereby increasing market liquidity in Hong Kong within a risk-controlled framework.

For licensed virtual asset trading platforms, the SFC has, for the first time, established a high-level framework to guide the development of perpetual contracts that are only accessible to professional investors and are leveraged products. This initiative aims to assist investors in implementing risk management strategies and to enhance liquidity in the spot market for related assets. To ensure investor protection, the framework outlines the necessary features of these leveraged products, including high transparency in product design, clear disclosure, and robust operational monitoring measures.

To further promote virtual asset trading activities in Hong Kong, the SFC permits subsidiaries of licensed virtual asset trading platforms to act as market makers on their platforms, provided they implement strong safeguards to reduce conflicts of interest. The participation of these subsidiaries is expected to bring additional liquidity channels to licensed virtual asset trading platforms. Dr. Yip Chi-hang, Executive Director of the SFC’s Intermediaries Division, stated: “Following the phased development approach outlined in the ASPIRe roadmap, this is crucial for the scalable growth of Hong Kong’s digital asset market. These targeted measures aim to enhance market liquidity and demonstrate the SFC’s firm commitment to developing Hong Kong’s digital asset market in a sustainable and collaborative manner.” The SFC will continue to closely monitor the implementation of these measures and maintain communication with stakeholders to ensure that these initiatives foster a safe and competitive market environment in Hong Kong.