Author: Qi Xiaoxin
On April 20, 2026, the Hong Kong Securities and Futures Commission (SFC) officially announced a new regulatory framework aimed at facilitating secondary market trading of tokenized SFC-authorized investment products (referred to as "tokenized products") on a pilot basis in Hong Kong. This initiative is regarded as a significant milestone in building Hong Kong's digital asset ecosystem.
Since the establishment of the tokenization-related regulatory framework at the end of 2023, the total assets under management of tokenized products in the Hong Kong market have grown to HK$10.7 billion. To further enhance market scalability and liquidity, the SFC believes that promoting 24/7 secondary market trading is "timely." The core purpose of the document is to facilitate the trading of tokenized open-ended funds (initially expected to be money market funds) on licensed virtual asset trading platforms, and to allow settlement using regulated stablecoins and tokenized deposits, thereby breaking the time constraints of traditional trading and enabling "24/7" trading, including overnight and weekend sessions.
Core Regulatory Rules and Operational Mechanisms
While liberalizing trading, the new framework establishes a rigorous regulatory and operational system, covering multiple dimensions such as trading channels, fair pricing, liquidity provision, and application processes.
Regarding trading channels and investor access, the document explicitly states that retail investors may conduct secondary market trading (i.e., screen-based automated order matching) of tokenized products through licensed virtual asset trading platforms. Platform operators must implement strict capital and position checks, executing trades only when the client's account holds sufficient funds or equivalent fungible product positions. Additionally, while licensed platforms are the primary channel, the SFC stated it will consider, on a case-by-case basis, allowing over-the-counter (OTC) secondary market trading arrangements.
In terms of fair pricing and investor protection, to prevent significant deviations of prices from net asset value (NAV), licensed platforms must implement effective risk management measures. Specific requirements include: issuing a price deviation alert to investors when the proposed transaction price deviates significantly from the product's real-time or near-real-time indicative NAV per unit; simultaneously, the platform must inform investors that they may choose to subscribe or redeem at the primary market level, rather than being limited to secondary market trading. Furthermore, platforms must implement system monitoring measures such as trading volatility limits and cooling-off periods to prevent excessive price fluctuations and market manipulation.
Concerning liquidity assurance and market maker systems, product providers should make every effort to ensure each tokenized product has at least one market maker, and market makers must provide no less than three months' prior notice before terminating services. Product providers must maintain close communication with market makers and formulate contingency plans. Licensed trading platforms must conduct due diligence on market makers to ensure they consistently meet standards regarding bid-ask spreads, quote values, quote duration, and participation rates.
Regarding infrastructure and application processes, the operation of this mechanism relies on infrastructure promoted by the Hong Kong Monetary Authority (HKMA), such as the "Ensemble Project," including support from tokenized deposits and regulated stablecoins. The document emphasizes that for new investment products intended to have tokenization features or existing products intending to introduce tokenization features, providers must consult with and obtain approval from the SFC in advance.
Market Impact and Industry Significance
The release of this policy has far-reaching and specific implications for the digital asset market in Hong Kong and globally.
This policy significantly enhances capital efficiency and liquidity. By allowing 24/7 trading, investors are no longer constrained by traditional stock market opening hours. Idle funds can generate returns via tokenized money market funds on weekends or overnight, and can respond to market fluctuations at any time. This holds great appeal for both retail and institutional investors seeking high liquidity.
It also promotes the deep integration of traditional finance and Web3. The framework draws on the mature experience of exchange-traded funds (ETFs) and licensed virtual asset trading platforms, combining the compliance of traditional securities (e.g., SFC authorization) with the technological advantages of digital assets (e.g., blockchain settlement, programmability). This not only provides traditional institutions like banks and fund companies with low-cost, high-efficiency issuance and distribution channels but also introduces compliant mainstream asset supply to the Web3 industry.
The SFC's "Circular Concerning Secondary Market Trading of Tokenized SFC-authorized Investment Products" effectively bridges the "last mile" from "issuance" to "circulation" for tokenized assets.
It not only addresses the long-standing liquidity pain points of tokenized products from a policy framework perspective but also constructs a safe, efficient, and transparent trading environment by introducing 24/7 trading mechanisms and stringent investor protection measures.
With the initial batch of tokenized money market funds expected to be listed on the secondary market soon, and the implementation of related regulations such as the Stablecoin Ordinance, we have reason to anticipate that this policy will accelerate the improvement of Hong Kong's digital financial infrastructure, promote the expansion of tokenized assets into more asset classes such as bonds and precious metals, and inject new digital vitality into Hong Kong's status as an international financial center.
