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Hong Kong's Securities and Futures Commission (SFC) has updated its regulatory framework for single-day leveraged and inverse products, introducing a flexible leverage structure. Under the new rules, fund managers can adjust the leverage multiple daily within the existing cap of 2x for leveraged products and -2x for inverse products. This change allows managers to lower the target leverage when necessary, particularly during periods of high trading volume, to better manage product volatility. The adjusted leverage for the next trading day will be disclosed after each day's market close. The SFC emphasized that this daily adjustment capability also reinforces the understanding that these products are designed for single-day trading only and are not suitable for holding beyond one day. The move aims to prevent extreme losses during volatile market conditions while maintaining orderly trading.
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