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SFC Expands Listed Fund Universe To Leveraged And Inverse Products Referencing HK-listed Single Stocks With Enhanced Safeguards
2026-06-05 18:10:45 The Securities and Futures Commission (SFC) today (5th) issued a revised circular to broaden the range of listed structured funds to include Single Stock Leveraged and Inverse (L&I) Products referencing highly liquid Hong Kong-listed mega-cap stocks. In light of strong market reception for Single Stock L&I Products over the past year, the SFC considers the time is ripe to extend the regulatory framework from products referencing overseas-listed stocks to those based on popular Hong Kong-listed stocks. This will not only expand retail investors’ tools to customise investment exposure, but will also address issuers’ growing interests to launch products with Hong Kong equities as underlying. The new move will further support trading activities in the city’s securities market. Since the debut of Single Stock L&I Products referencing overseas-listed stocks in March 2025, their assets under management (AUM) and average daily turnover (ADT) have surged more than 302 times to HK$106 billion and 136 times to HK$9.3 billion, respectively. They accounted for a significant proportion of Hong Kong’s L&I Products market at 80% of total AUM and 78% of ADT as of May 2026. To support orderly market development over the long term, the SFC has also strengthened investor safeguards in the revised circular. For all L&I Products, product providers are now explicitly required to continuously monitor their products’ capacities to support the targeted leveraged or inverse exposure, maintain a reasonable buffer, and promptly notify the SFC of any potential issues disrupting product operations. For Single Stock L&I Products, the SFC has also introduced enhanced eligibility criteria for product providers, together with requirements to establish robust business continuity plans to mitigate heightened operational risks for such products. These plans should set out clear contingency and defensive measures with defined triggers for activation. ~ AASTOCKS Financial News Website: www.aastocks.com | |