PETER PARKS

A money market fund that can be traded on Saturdays and Sundays?

The Securities and Futures Commission (SFC) on Monday (26th) announced that it had approved two SFC-authorised tokenised money market funds for round-the-clock secondary-market trading on SFC-licensed virtual asset trading platforms (VATPs) with immediate effect. The funds are the ChinaAMC Hong Kong Dollar Digital Money Market Fund and the ChinaAMC US Dollar Digital Money Market Fund. The SFC described them as among the first publicly offered tokenised funds in the world to be approved for secondary-market trading.

China Asset Management (Hong Kong), the fund manager, said on the same day that the first platform to list the funds would be Panther Trade (Hong Kong), a licensed VATP wholly owned by Futu Holdings (Nasdaq: FUTU). Retail investors will be able to trade the tokenised units of both funds 24 hours a day, 365 days a year. During the initial phase, trading will be available in the Hong Kong dollar and US dollar-denominated F-class units respectively.

The innovation is not that they can be traded, but that the market never closes

Neither fund is a new product, and this is not the first time they have been traded like stocks. The ChinaAMC Hong Kong Dollar Digital Money Market Fund was authorised by the SFC as early as February 2025, becoming the first tokenised fund in the Asia-Pacific region aimed at retail investors. The two funds also have listed classes on the Hong Kong Stock Exchange (stock codes: 3471 and 3472), where they can be traded during Hong Kong stock market hours.

The real change this time concerns the tokenised classes. Previously, tokenised units could only be subscribed for or redeemed through the primary market at net asset value, and were subject to traditional trading hours. Investors can now trade directly with one another on a VATP, including after the Hong Kong stock market closes, at weekends and on public holidays. Primary-market subscriptions and redemptions remain unchanged and will continue to be handled according to the funds' offering documents and daily net asset value calculations.

Hong Kong's tokenised fund market now extends beyond one or two products. SFC figures released in April this year showed that 13 tokenised products had been offered to the Hong Kong public as of March. Assets under management in tokenised classes had increased about sevenfold in a year to HK$10.7 billion. The monthly report of the ChinaAMC US Dollar Digital Money Market Fund showed that its assets stood at about US$568 million (approximately HK$4.4 billion) as at September 30.

Why start with money market funds?

The trading arrangement is based on a circular issued by the SFC on April 20, 2026. The framework draws on the existing regulatory regimes for exchange-traded funds (ETFs) and VATPs, and allows SFC-authorised tokenised funds to be traded on licensed VATPs in the secondary market on a pilot basis. The requirements cover four areas: operation of trading channels, fair pricing, liquidity provision and information disclosure.

The SFC said the first products would mainly be tokenised money market funds. It would closely monitor trading before considering whether to expand the scope of products in light of market developments and accumulated experience, but gave no timetable.

Money market funds mainly invest in short-term deposits and high-quality money market instruments, and their net asset values tend to fluctuate less. That makes them a relatively controllable risk for a round-the-clock trading pilot. If the pilot operates smoothly, it could provide a stronger basis for extending the arrangement to more complex products.

The biggest test: will anyone take the other side at weekends?

Round-the-clock trading does not mean there will be buyers around the clock. After Hong Kong stocks and the money markets in which the funds invest have closed, secondary-market prices may deviate significantly from the funds' net asset values. The SFC's circular requires platforms to clearly warn in their disclosures that trading may be thin outside normal Hong Kong financial market hours and at weekends, with prices potentially trading at a larger premium or discount.

To address this, the SFC has introduced several safeguards:

  • Product providers must use their best endeavours to appoint at least one market maker for each product. At least one market maker must give no less than three months' notice before ending the arrangement.
  • Platforms must display both the real-time indicative net asset value (iNAV) and the latest official net asset value. During trading hours, the iNAV should generally be updated at least once every 15 seconds. Platforms must alert investors when an order price deviates significantly from the reference net asset value.
  • Platforms must remind investors that they can still subscribe for or redeem units in the primary market at net asset value.
  • If trading in the primary or secondary market is suspended, or market-making services are interrupted, product providers must notify the SFC immediately.

Panther Trade has also introduced a price-deviation alert and a five-minute cooling-off period.

Neither the SFC nor ChinaAMC disclosed first-day trading volume or bid-ask spreads.

Who stands to benefit?

For licensed platforms, Panther Trade, the first to launch the service, can use it to build its user base and accumulate trading data. Only one platform is connected at present. The competitive landscape could change if more platforms are approved in future.

For asset managers, connecting tokenised units to the secondary market opens another sales channel for traditional funds beyond banks and brokers. But the process involves more than simply "turning an existing fund into tokens". The SFC requires product providers to:

  • appoint market makers, monitor liquidity and draw up contingency plans;
  • ensure tokens can be transferred in both directions between the primary and secondary markets; and
  • appoint licensed or registered distributors to handle third-party subscriptions and redemptions.

The overall operational threshold is not low. China Asset Management (Hong Kong) said it would expand its product range in future to include bonds and commodities.

On cross-border funds, the SFC said tokenised funds could eventually work with tokenised deposits being developed by the SFC and the Hong Kong Monetary Authority (HKMA) under the Ensemble project. Investors could then move funds immediately to other uses after selling tokenised assets on the platform. In the initial phase, however, transactions will be settled in Hong Kong dollars and US dollars, while the funds' offering documents state that there are currently no plans to offer them outside Hong Kong. Whether overseas investors can participate, and how, will depend on the platform's account-opening requirements.

Tokenisation moves into mainstream finance

In recent years, the term "tokenisation" has often been associated with speculative and investment-driven projects, with regulators primarily focused on containing risks. This time, a publicly offered money market fund regulated under the Code on Unit Trusts and Mutual Funds is being traded in tokenised form on a licensed platform. It shows that blockchain technology is gradually becoming an optional component of traditional financial infrastructure, rather than an isolated parallel world.

Similar efforts are under way overseas, and tokenised funds are no longer limited to institutional investors. Franklin Templeton launched the Franklin OnChain U.S. Government Money Fund in 2021, the first tokenised fund approved by the US Securities and Exchange Commission (SEC). In Singapore, a tokenised money market fund launched by DBS Bank and Franklin Templeton is also planned to be opened to retail investors, with a minimum investment of just US$20. Hong Kong's distinction this time is not that the fund is publicly offered, but that publicly offered tokenised funds can be traded on a regulated platform in the secondary market.

What to watch next

One, trading volume and bid-ask spreads. If average daily turnover remains below HK$1 million in the first few months, or bid-ask spreads stay above 0.1 per cent for a prolonged period, it would indicate that actual demand and liquidity remain weak.

Two, the number and types of newly approved products. Whether the SFC expands the scope to bond funds or other products will indicate its regulatory confidence. If no new products follow for an extended period, the pilot could stall.

Three, the number of connected platforms. Panther Trade is currently the only platform to have launched the service. Whether other licensed VATPs follow will affect the distribution of liquidity and the competitive landscape.

Four, whether other jurisdictions follow suit. If the Monetary Authority of Singapore (MAS) or the US SEC introduces a similar secondary-market framework in the near term, Hong Kong's first-mover advantage may narrow.

Five, the direction of fund flows. For money market funds, daily primary-market subscription and redemption amounts are the most direct indicators to watch.