Regulatory body responsible for overseeing Hong Kong’s securities and futures markets, Securities and Futures Commission (SFC), introduced a new regulatory framework designed to pilot secondary market trading of tokenised investment products authorised by the SFC, as part of broader efforts to support the development of Hong Kong’s digital asset ecosystem and increase trading activity over time.
According to the regulatory circular, the framework is primarily intended to enable secondary trading of tokenised SFC-authorised open-ended funds on SFC-licensed virtual asset trading platforms VATPs. The initiative is also aimed at widening access to regulated trading infrastructure for retail investors, while allowing, on a discretionary basis, the possibility of over-the-counter secondary trading arrangements subject to individual assessment.
Since the introduction of the SFC’s initial tokenisation regulatory approach in late 2023, market participants have increasingly explored the issuance and distribution of tokenised financial products in Hong Kong, creating new market activity and product structures. As of March 2026, there were 13 tokenised products available to the public in the jurisdiction, with assets under management in tokenised share classes rising approximately sevenfold to 10.7 billion US dollars over the preceding year.
In response to this growth, the regulator has indicated that the timing is appropriate to introduce a pilot framework for continuous secondary trading, including potential 24-hour trading models. The framework is intended to further integrate tokenised financial instruments into the broader Web3 ecosystem, with potential use cases involving regulated stablecoins and tokenised deposits to support continuous settlement and liquidity.
In order to address structural considerations associated with liquidity and investor protection, particularly in relation to trading outside conventional market hours, the framework incorporates measures informed by practices in exchange-traded fund markets and licensed virtual asset trading infrastructure. These measures are intended to support fair pricing mechanisms, orderly market conditions, liquidity provisioning standards, and enhanced disclosure requirements.
Advancing Market Integration And Phased Implementation Of Tokenised Products
According to the SFC, the initiative represents a step toward the development of a more integrated digital asset market structure in Hong Kong, combining traditional financial products with blockchain-based settlement and trading capabilities. The framework is also positioned as a response to increasing demand for continuous market access in a trading environment characterised by fast information flow and heightened volatility.
The initial phase of the pilot is expected to focus on tokenised money market funds, with the potential for expansion to additional product categories following an assessment of operational performance and market conditions.
Market participants, including product issuers and SFC-licensed virtual asset trading platforms, are encouraged to engage with the regulator in advance of implementing activities under the new framework or to provide relevant notifications as required.
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Source: Mpost.io
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