The SFC issued two circulars and a framework on the same day. Brokers that already offer securities margin financing may now lend to those clients for crypto trading and route orders to shared order books. Licensed trading platforms may let an affiliated company make markets on their platforms, and may propose perpetual contracts for professional investors.
Why it matters: Hong Kong is adding leverage and liquidity in steps, each tied to the securities rulebook, and the first step is narrow.
For Ethereum: Ether is one of only two tokens a broker may accept as collateral for crypto financing, at a haircut of at least 60%.
The package has three parts, all under Pillar P and Pillar A of the SFC’s ASPIRe roadmap.
Financing and shared order books (circular). Brokers dealing in crypto through an omnibus account with a licensed platform may extend credit to their existing securities margin clients, and to no one else (para 5). Securities are the main collateral. A broker may also accept crypto collateral, limited to bitcoin and ether, with a haircut of 60% or more (para 7). Until the SFC consults on capital rules, crypto collateral carries a 100% haircut in the broker’s own financial resources calculation (para 14). Brokers may route client orders to the shared order books that licensed platforms run with overseas affiliates, and retail clients must opt in after a risk explanation (paras 16 to 17). Brokers that allow withdrawals must harden their controls against fraudulent withdrawal instructions (para 20).
Affiliated market makers (circular). A platform may let a group company make markets if that company is functionally independent, client orders take priority at the same price, and the affiliate’s trades are flagged in post-trade data (para 7). The platform must notify the SFC and file an independent review first (para 9).
Perpetual contracts (framework). Platforms may submit proposals to offer perpetual contracts to professional investors only. The reference asset must be a token already open to retail spot trading on that platform, or an index of such tokens. Margin must be posted in full before an order is accepted, the platform may not extend credit, and margin can only be fiat or HKMA-regulated stablecoins and tokenised deposits.
Implications
For brokers, the financing permission is narrow. It only reaches clients who already have securities margin accounts, and the capital treatment makes crypto collateral expensive to hold on the broker’s own books until the SFC consults. Expect the first users to be brokers with large securities margin books adding crypto as a feature, not new crypto lenders.
The affiliated market maker rule answers the SFC’s own statement that liquidity on Hong Kong platforms “remains subdued”. It lets the global groups that own licensed platforms bring their market-making arms onshore, with conflict controls borrowed from exchange practice.
Perpetual contracts are the bigger change for platforms, since they are the most traded crypto product offshore. The framework keeps them on-platform, fully margined and professional-only, which rules out the retail leverage that drives volumes elsewhere.
On 27 May the HKMA told banks registered for crypto dealing that the same financing standards apply to them.
For Ethereum
The financing circular names ether alongside bitcoin as the only acceptable crypto collateral. The 60% minimum haircut is steep, but naming ether in a supervisory rule puts it in the same collateral bracket as bitcoin for Hong Kong brokers. Perpetual contracts go the other way: margin must be fiat, regulated stablecoins or tokenised deposits, so ether cannot be posted as margin even where the contract references it.
What to watch
The SFC’s consultation on capital requirements for crypto activities, which will decide whether crypto collateral stops carrying a 100% haircut for brokers. Also the first perpetual contract approvals and which reference assets they cover.