The Hong Kong Securities and Futures Commission Optimizes the Regulatory Framework for Single-Day Leveraged and Inverse Products to Ensure Orderly Market Trading
Svmuu News: The Hong Kong Securities and Futures Commission (SFC) issued a revised circular today requiring leveraged and inverse products—whose capacity is highly susceptible to changes in market conditions—to adopt a flexible leverage structure. Under this structure, the leverage ratio may be adjusted daily within the existing caps (i.e., 2x for leveraged products and -2x for inverse products). Consequently, product providers may lower the target leverage ratio of these products when necessary, thereby providing greater flexibility to manage the products during periods of high trading volume. The leverage multiples for these products on the following trading day will be disclosed after the market closes each day. The potential daily adjustments to leverage multiples will also help reinforce 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)
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