The Securities and Futures Commission (SFC) said that it is putting forward a high-level framework that would allow perpetual contracts and related margin financing on licensed virtual-asset trading platforms. The message is straightforward: Hong Kong wants derivatives activity to move onto regulated rails, with leverage treated as a supervised product rather than an informal feature.
SFC chief executive Julia Leung introduced the plan at the Consensus Hong Kong conference and framed the rollout as intentionally narrow at the start. In the initial phase, perpetual contracts and margin lending would be restricted to professional investors only, with retail participation explicitly left out under the current design.
A professional-investor perimeter with TradFi-style controls
On margin lending, the SFC said the first permitted collateral set will be limited to major cryptocurrencies, specifically Bitcoin (BTC) and Ethereum (ETH). The framework also signals conservative collateral haircuts drawn from traditional finance practice, effectively raising the collateral required to support the same nominal borrowing in a high-volatility market.
The regulator described a principle-based supervisory posture that prioritizes outcomes over rigid technical prescriptions, but the operating expectations are still demanding. Any licensed platform seeking to list perpetuals would need to demonstrate real-time position monitoring, robust margining, orderly liquidation processes, and comprehensive record-keeping that stands up to supervisory review.
Market-making governance and conflict controls
A central pillar of the framework is how liquidity is provisioned and governed, including the use of affiliated market-making entities. The SFC indicated it may allow affiliated market makers, but only with strict conflict-of-interest safeguards and independent governance designed to reduce manipulation risk while supporting continuous liquidity. In practical terms, the framework points to functional separation between market making and exchange operations, controls to prevent illicit information sharing, transparency around market-making activity and disclosures, and capital adequacy expectations to ensure liquidity provision is resilient under stress.
For institutional traders and product teams, this is a clear pathway—but it comes with a meaningful compliance uplift versus many offshore venues. The trade-off is deliberate: higher collateral discipline and tighter governance standards can raise the cost of leverage and liquidity provision, while reducing counterparty, market-conduct, and operational risk for regulated participants. Compliance teams should expect margin methodology, stress testing, disclosures, and surveillance controls to be core decision points under the SFC’s principle-based criteria.
The derivatives push is being positioned alongside broader policy momentum in Hong Kong, including the Hong Kong Monetary Authority’s progress toward initial stablecoin licences and the SFC’s plan for a digital asset accelerator. Taken together, the direction of travel is to expand institutional participation while concentrating activity inside licensed venues that can meet higher risk-management expectations.