On November 3, 2025, the Securities and Futures Commission ("SFC") issued a circular outlining its regulatory approach for SFC-licensed virtual asset trading platform operators (Platform Operators) to integrate with global affiliate virtual asset trading platforms ("OVATP") for shared liquidity. The goal is to enhance market efficiency and client access to global liquidity. Platform Operators must implement measures to manage risks such as trading and settlement, as well as market misconduct.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On November 3, 2025, the Securities and Futures Commission ("SFC") issued a circular detailing its regulatory approach and expected standards for SFC-licensed virtual asset trading platform operators (Platform Operators) to integrate their order books with those of global affiliate virtual asset trading platform operators ("OVATPs") via a Shared Order Book.
The SFC aims to foster the growth of Hong Kong's virtual asset ecosystem by integrating with global liquidity, as per Pillar A of its ASPIRe roadmap.
The Shared Order Book facilitates the combination of orders from different platforms into a shared liquidity pool, enabling cross-platform order matching and execution.
This integration introduces new risks, such as potential settlement exposure and increased market surveillance complexity.
Platform Operators must implement risk management strategies to safeguard client interests and address these risks.
Key regulatory requirements include selecting eligible OVATPs and clients operating in FATF-compliant jurisdictions with effective regulation for market abuse and client asset protection.
To manage trading and settlement risks, Platform Operators must ensure pre-funding of orders and implement a delivery-versus-payment ("DVP") mechanism for settlement.
A reserve fund should be maintained in Hong Kong to cover client losses resulting from settlement failures.
Compensation arrangements should cover potential losses of Settlement Assets to a level not less than that required by the VATP Guidelines.
Market misconduct risk is addressed through internal policies, effective market surveillance, and a unified joint program with OVATPs.
Platform Operators must secure prior written approval from the SFC to operate Shared Order Books.
Other operational requirements include compliance with VATP Guidelines, cybersecurity measures, risk disclosure to clients, and ensuring client protection when accessing the Shared Order Book.
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