SFC announced latest measures to expand Hong Kong’s virtual asset services and product offerings
In mid-February 2026, the Securities and Futures Commission (SFC) announced a package of initiatives to enhance liquidity and innovation in Hong Kong's virtual asset (VA) market.
The SFC introduced three key measures:
(1) A Circular which sets out the SFC’s framework for licensed corporations (i.e., VA brokers) to offer financing to clients for VA dealing and establishes standards for shared order books and client asset safeguards:
VA Financing: VA brokers may now extend credit to securities margin clients for VA dealing, using securities and limited VA collateral (currently only Bitcoin and Ether, subject to a minimum 60% haircut). This aims to boost market liquidity in a controlled environment.
Risk Management: When assessing clients’ financial capability, brokers must consider VA volatility, concentration risk and sector correlation. There are strict controls, where credit limits should not increase for VA financing. It is expected that VA brokers should have real-time collateral monitoring and there is prohibition on rehypothecation of VA collateral.
Shared Order Books: Brokers may access shared liquidity pools with affiliate platforms after thorough risk assessment (conflicts, settlement risks, client protection). Retail clients can only participate after explicit election and clear disclosure of additional cross-jurisdictional risks.
Client Asset Safeguards: Brokers permitting VA withdrawals must implement robust cybersecurity measures, continuous monitoring and collaborate with virtual asset trading platforms (VATPs) operators to detect and block suspicious withdrawal attempts.
(2) A Paper outlining the SFC’s framework for allowing licensed VATPs to offer VA perpetual contracts (Perps) to professional investors (PIs) in Hong Kong.
Scope & Eligibility: Perps are high-risk, leveraged contracts with no expiry date. Due to their complexity, they may only be offered to PIs. Platforms must also assess each client's derivatives knowledge before providing services.
Product Design: VATPs must establish transparent rules for trading, margining, and liquidation. Key parameters such as funding rates and position valuation must be based on reliable data and disclosed in real-time.
Risk Management: To prevent credit exposure, VATPs cannot extend credit for margin. They must implement automated pre-trade margin checks and follow a clear, pre-defined hierarchy for loss absorption (e.g., insurance funds or auto-deleveraging) when positions are liquidated.
Market Integrity: Robust surveillance systems are required to detect manipulation. VATPs must also provide comprehensive, clear disclosures to clients explaining all material risks, including the potential for forced close-outs and total loss.
The SFC invites interested operators to discuss their proposed Perp structures and reminds them that this framework may be updated based on market developments.
(3) A Circular setting out the SFC’s framework for allowing SFC-licensed VATPs to have an affiliated company act as a market maker on their platform to improve liquidity.
Objective & Background: Liquidity on Hong Kong's VATPs is currently subdued. Permitting affiliated market makers (AFMMs) aligns with the SFC's ASPIRe roadmap goal to deepen liquidity and reinforce market resilience.
Core Condition: While group companies are generally banned from proprietary trading on the platform, the SFC may allow AFMMs on a case-by-case basis, provided strict conflict of interest controls are in place to ensure client interests are prioritised.
Specific Safeguards: To manage risks, VATPs must ensure the AFMM is functionally independent, implement information barriers, and guarantee that client orders always have priority over AFMM orders at the same price. AFMM trades must also be clearly identified in post-trade data.
Approval Process: Before commencing activities, platforms must notify the SFC and submit an independent professional's report confirming the effectiveness of their controls. A designated Manager-in-Charge must declare ongoing compliance and undertake to suspend the AFMM immediately if significant breaches occur.
These initiatives represent the latest phase of the SFC's ASPIRe roadmap and aim to deepen market liquidity through targeted reforms. To further support innovation, the SFC also announced the upcoming launch of a "Digital Asset Accelerator" to provide a communication channel for regulators and industry innovators.
How Ocorian can help
Policy and Procedure Design: We assist VA brokers in developing robust internal policies for offering margin financing service, e.g., defining criteria for "strong credit profiles" of clients, determining the sufficiency of collateral and establishing risk-controlled lending practices.
Collateral Management Guidance: We advise on the specific safeguards and collateral management frameworks needed to handle VAs such as Bitcoin and Ether.
Framework Development: We guide VATPs in designing their perpetual contract proposals that meet the SFC's new high-level framework. We also advise on transparent product design, clear disclosure documents and robust operational controls.
Risk Management Advisory: We help VATPs establish the necessary risk management strategies to handle leveraged instruments and advise on setting appropriate leverage limits and margin requirements.
Conflict of Interest Mitigation: We help VATPs set up strong safeguards to mitigate conflicts of interest. This involves designing independent market-making units and establishing clear operational boundaries between the platform and its affiliate to ensure fair market practices.
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