Hong Kong SFC Refines the Regulatory Framework for Single-Day Leveraged and Inverse Products to Ensure Orderly Market Trading

The Hong Kong Securities and Futures Commission (SFC) today issued a revised circular, stipulating that leveraged and inverse products, whose capacity is highly susceptible to market changes, must adopt a flexible leverage structure. Under this structure, the leverage multiple can be adjusted daily within the existing caps (i.e., 2x for leveraged products and -2x for inverse products). Therefore, product providers can lower the target leverage multiple of such products when necessary, thereby providing greater room to manage the products during periods of high trading volume. The leverage multiple for such products on the next trading day will be disclosed after the daily market close. The potential daily adjustment of the leverage multiple also helps deepen investors' understanding that leveraged and inverse products are single-day products, reminding them that these products are not suitable for holding for more than one day. (Hong Kong Securities and Futures Commission)