Exchange Publishes Consultation Conclusions on Proposals to Enhance Listing Competitiveness

On July 24, The Securities and Futures Commission (SFC) has released a revised circular to enhance the regulatory framework for authorised leveraged and inverse (L&I) products. Driven by the booming single-stock L&I products, Hong Kong’s L&I product market has seen substantial expansion since early 2026, making product operations increasingly reliant on the ecosystem of underlying stocks to sustain target leverage exposure. To adapt to the fast-changing market conditions, the SFC requires L&I products with market-sensitive capacity to adopt a flexible leverage structure, allowing their daily leverage factors to adjust within the existing caps of 2x for leveraged products and -2x for inverse products. This arrangement grants product providers greater operational flexibility to adjust target leverage during high-volume trading sessions, effectively maintaining orderly market operations and mitigating excessive tracking difference risks. Under the new regulatory requirements, providers are obligated to publish the next trading day’s target leverage factor on their official product websites and the HKEX website after daily market close, and clearly indicate both the flexible leverage feature and maximum leverage level in product names to improve market transparency. The SFC emphasises that L&I products are purely daily trading and hedging instruments that are not designed for overnight or long-term holdings, as their returns may deviate significantly from underlying assets over time. Alongside the regulatory updates, the SFC has launched a themed infographic to help investors understand the inherent complexity and risks of L&I products, encouraging them to conduct daily risk assessments and evaluate product suitability before making investment decisions. Overall, the regulatory revision achieves a balanced goal of supporting sustainable market development and strengthening comprehensive investor protection. Source: https://www.hkex.com.hk/News/Regulatory-Announcements/2026/260724news?sc_lang=en Relative Circulars: https://www.hkex.com.hk/-/media/HKEX-Market/News/Market-Consultations/2016-Present/March-2026-Competitiveness-Review/Conclusions-Jul-2026/cp202603cc.pdf https://www.hkex.com.hk/News/Market-Consultations/2016-to-Present/Responses_Jul_2026?sc_lang=en