Hong Kong's Securities and Futures Commission Proposes Perpetual Contract Regulatory Framework Limited to Institutional Investors

On February 11, Ashley Alder—CEO of Hong Kong’s Securities and Futures Commission (SFC)—announced at the Consensus Hong Kong conference that the regulator will release a "high-level framework" allowing licensed trading platforms to offer perpetual contract products. Initially, these products will only be available to institutional investors, not retail clients. The framework will prioritize risk management, requiring platforms to have robust risk control capabilities and ensure fair trading mechanisms for customers. Additionally, the SFC will permit brokerages to provide financing services to creditworthy clients, with collateral including securities and virtual assets. Given the high volatility of virtual assets, only Bitcoin (BTC) and Ethereum (ETH) will be eligible as collateral initially. For market-making services: if a platform offers such services, it must establish an independent market-making department and implement a strict conflict-of-interest management mechanism. Alder noted these measures align with the SFC’s roadmap to develop Hong Kong’s crypto market by 2025, aiming to enable compliant institutions to offer a more diverse range of products and services.