Hong Kong SFC Paves Way for Enhanced Crypto Liquidity and Expanded Offerings
In a significant stride towards solidifying its position as a leading digital asset hub, the Hong Kong Securities and Futures Commission (SFC) today () issued two pivotal circulars. These directives grant licensed virtual asset trading platforms the ability to integrate their order books with compliant overseas platforms, thereby fostering shared liquidity, enabling cross-platform matching, and streamlining transaction execution. Concurrently, the SFC has indicated its intention to broaden the scope of products and services available through licensed virtual asset platforms.
Integrating Global Liquidity for Enhanced Market Efficiency
The circulars explicitly authorize Hong Kong-based virtual asset exchanges to collaborate with affiliated international platforms by sharing order books. This strategic integration is designed to consolidate liquidity across group entities, ultimately boosting overall market efficiency. For Hong Kong investors, this initiative promises access to deeper global liquidity, a reduction in price discrepancies, and optimized price discovery mechanisms.
Robust Safeguards for Shared Liquidity Operations
To ensure stringent investor protection and maintain market integrity, the SFC has outlined comprehensive requirements for platforms participating in shared liquidity. These include:
- **Delivery Versus Payment (DVP):** Mandatory implementation of DVP mechanisms.
- **Intraday Settlement:** Requirement for intraday settlement processes.
- **Unsettled Transaction Limits:** Strict monitoring and enforcement of limits on unsettled transactions.
- **Reserve Fund & Insurance:** Establishment of a dedicated reserve fund in Hong Kong, sized no less than the specified limit, complemented by robust insurance and compensation arrangements to cover settlement asset risks.
Furthermore, market surveillance must be uniformly implemented, providing real-time transaction and client data to the SFC. When extending services to retail investors, platforms are obligated to provide comprehensive risk disclosure and secure explicit client consent. The SFC emphatically stated that any platform operator wishing to utilize shared order books must obtain prior written approval, subject to additional terms and conditions.
Expanding Product Offerings for Professional Investors
In a separate circular, the SFC has also introduced provisions that permit platform operators to offer virtual assets (including stablecoins) with a track record of less than 12 months to professional investors. Additionally, the new guidelines allow for the custody of digital assets not actively traded on the platform through affiliated entities. These expanded offerings are contingent upon strict adherence to existing regulatory guidelines and the implementation of robust risk management practices.
SFC CEO Emphasizes Balanced Growth and Innovation
Julia Leung, CEO of the SFC, underscored the strategic importance of these developments in a statement released on Monday. “Steadily expanding market liquidity and commercial products and services is key to promoting the sustainable development of Hong Kong’s digital asset ecosystem,” Leung stated.
“Today, we have taken a significant step towards connecting global liquidity, marking our commitment to striking an ideal balance between fostering market innovation and vitality, upholding high standards of investor protection, and ensuring market integrity.”
Disclaimer: This article is intended solely for market information purposes. All content and views are for reference only and do not constitute investment advice, nor do they represent the views and positions of BlockTempo. Investors should make their own decisions and transactions. The author and BlockTempo will not bear any responsibility for direct or indirect losses resulting from investor transactions.
