Hong Kong SFC enhances regulatory framework for single-day leveraged and inverse products to ensure orderly market trading

TechFlow news, July 24: The Hong Kong SFC issued a revised circular today, requiring leveraged and inverse products whose capacity is highly affected by changes in market conditions to adopt a flexible leverage structure. Under this structure, the leverage multiple can be adjusted daily within the existing upper limit (i.e., 2x for leveraged products, -2x for inverse products).

Therefore, product providers may lower the target leverage multiple of such products when necessary, thereby having more room to manage the products during periods of high trading volume. The leverage multiple of such products for the next trading day will be disclosed after the market closes each day. The potential daily adjustment of the leverage multiple will also help deepen investors' understanding that leveraged and inverse products are single-day products, reminding investors that such products are not suitable for holding for more than one day.