Hong Kong’s Securities and Futures Commission has issued a revised circular to refine the regulatory framework for leveraged and inverse products whose capacity is highly sensitive to market conditions. Under the updated approach, those products must adopt a flexible leverage structure, allowing leverage to be adjusted on a daily basis within the current caps of 2x for leveraged products and -2x for inverse products. The SFC said the change would let product providers lower target leverage when necessary, giving them more room to manage products during periods of heavy trading activity. It also said the leverage level for the next trading day will be disclosed after each market close. According to the regulator, the possibility of daily leverage adjustments may also help investors better understand that leveraged and inverse products are designed as single-day instruments and are not suitable for holding longer than one day.
Hong Kong’s Securities and Futures Commission said today it has issued a revised circular requiring leveraged and inverse products whose capacity is highly affected by market conditions to adopt a flexible leverage structure.
Under that structure, leverage may be adjusted daily within the current caps. The ceiling remains 2x for leveraged products and -2x for inverse products. The SFC said product providers will be able to lower the target leverage of those products when necessary, giving them more room to manage the products during periods of high trading volume.
The leverage level for the next trading day will be disclosed after the market closes each day.
The regulator added that the possibility of daily leverage adjustments may also deepen investor understanding that leveraged and inverse products are single-day products, and serve as a reminder that they are not suitable for holding for more than one day.
This article was originally published by Bit.Fan. For more cryptocurrency news and market insights, visit www.bit.fan. Disclaimer:
The market information, project data, and third-party content displayed on this platform are for industry information sharing only and do not constitute any form of investment advice or return commitment.
Cryptocurrency trading carries high risks. Users should fully assess their risk tolerance and make independent decisions. All profits, losses, and legal responsibilities are borne by the users themselves.
