On January 23, 2025, the Securities and Futures Commission ("SFC") in Hong Kong announced new regulatory requirements to expand the range of listed structured funds that can be offered to the public, including Single Stock Leveraged and Inverse ("L&I") Products and Defined Outcome Listed Structured Funds. This move is aimed at providing investors with new trading and hedging tools and is subject to specific safeguards to balance potential benefits and risks.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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On January 23, 2025, the Securities and Futures Commission ("SFC") in Hong Kong introduced new regulatory requirements to broaden the spectrum of listed structured funds accessible to the public.
The updated regulatory framework encompasses Single Stock Leveraged and Inverse ("L&I") Products and Defined Outcome Listed Structured Funds, both of which are popular overseas but new to the Hong Kong market.
These innovative products are designed to offer investors tools for trading and hedging prominent individual stocks listed overseas, facilitate price discovery during Asian trading hours, and provide more tailored investment options.
To mitigate potential benefits and risks, the SFC has integrated safeguards. Single Stock L&I Products will reference highly liquid mega-cap stocks listed on major overseas exchanges, with a general leverage factor ranging from 2x to -2x.
The SFC’s Executive Director of Investment Products, Christina Choi, underscores the significance of market development and investor protection. This new framework offers a clear pathway for product authorization while maintaining rigorous regulatory standards.
The circular amends previous requirements set forth in the Code on Unit Trusts and Mutual Funds, replacing the SFC’s Circular on Leveraged and Inverse Products dated 22 May 2020.
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