HONG KONG – Hong Kong financial regulators are set to unveil a framework for trading platforms to offer perpetual contracts, the head of the region’s Securities and Futures Commission said on Wednesday.
Hong Kong brokers will soon be able to provide financing to clients backed by bitcoin and ether and platforms will be able to offer market making through independent units, Julia Leung, chief executive of the Hong Kong SFC, said at CoinDesk’s Consensus Hong Kong conference.
While the SFC plans to share more details later, the measures are part of the regulator’s broader push to allow regulated companies to offer more products and services, Leung said, following its roadmap to 2025, which included an effort to develop the local crypto market.
The SFC has already published the findings of its consultation on custody and related issues, but these new initiatives focus on further developing these markets in Hong Kong, including with novel products such as perpetual futures contracts.
“We will publicize a high-level framework for platforms to offer perpetual contracts,” he said.
These products will only be available to institutional investors, not retail clients, at this time, he said, and the framework will focus on risks. Platforms that want to offer these products will have to be able to manage these risks, “and they also have to be very fair with customers.”
On the other initiatives, Leung said the SFC will begin sharing more details soon.
“We will allow brokers to provide financing to clients with strong credit profiles, and the collateral will be backed by both securities and virtual assets,” he said. “Because virtual assets… many of them are very volatile, so we will start with two that will be eligible as collateral, bitcoin and ether.”
Platforms that want to engage in market making will need to ensure they have strict rules on conflicts of interest and independent market making units, he said.
