Anthony WALLACE

The Securities and Futures Commission (SFC) said on October 26 that it had approved the world's first tokenised funds offered to the public for secondary-market trading on an SFC-licensed virtual asset trading platform (VATP). The first two products are Huaxia Fund (Hong Kong)'s Huaxia Hong Kong Dollar Digital Money Market Fund and Huaxia US Dollar Digital Money Market Fund, which became available for round-the-clock trading from the same day. The platform is PantherTrade, wholly owned by Nasdaq-listed Futu Holdings (FUTU).

The innovation is not tokenisation, but 24/7 trading

The two funds are not new products. The Huaxia Hong Kong Dollar Digital Money Market Fund was launched as early as February 2025 as the Asia-Pacific region's first tokenised fund aimed at retail investors. Both funds also have share classes listed on Hong Kong Exchanges and Clearing (0388.HK), under stock codes 3471.HK and 3472.HK. In other words, retail investors could already subscribe to or redeem the funds through distribution channels at their daily net asset value, or trade the listed share classes during Hong Kong stock-market trading hours.

The breakthrough this time is that the tokenised shares can be traded on a VATP 24 hours a day, 365 days a year, including weekends and public holidays. They are no longer constrained by traditional fund cut-off times and multi-day settlement. The same fund now has three routes for entering and exiting:

  • subscriptions and redemptions in the primary market at the day's net asset value;
  • trading of the listed share classes on the Hong Kong exchange during market hours; and
  • round-the-clock secondary-market trading on a VATP.

From a regulatory perspective, the SFC issued a circular on April 20, 2026, setting out a pilot scheme to allow authorised tokenised funds to conduct secondary-market trading on licensed VATPs, building on the existing regulatory frameworks for exchange-traded funds (ETFs) and VATPs. The requirements cover trading-platform operations, fair pricing, liquidity provision and disclosure.

According to arrangements announced by the issuer and the platform, the trading interface will display an estimated net asset value, or iNAV, in real time and provide alerts when prices deviate from it. A five-minute cooling-off period will also be imposed as a volatility-control measure. Primary-market subscriptions and redemptions will remain in place as a liquidity backstop; the round-the-clock arrangement applies only to secondary-market trading.

Wu Ka-lei, the SFC's executive director of investment products, said the launch of secondary-market trading for tokenised money market funds was an important milestone in the regulator's efforts to develop Hong Kong's digital-asset market, adding 24/7 trading functionality to the tokenisation ecosystem. The SFC said the first products were mainly tokenised money market funds and that it would closely monitor trading activity before considering an expansion of the product range based on market developments and experience gained. It added that tokenised funds could in future work with the tokenised deposit function being developed by the SFC and the Hong Kong Monetary Authority under Project Ensemble, improving settlement and asset-liquidity efficiency.

Huaxia Fund (Hong Kong) said its tokenised products had exceeded US$800 million (about HK$6.2 billion) in size as of June 2026.

Why start with money market funds?

Money market funds mainly invest in short-term deposits and high-quality money-market instruments, with capital preservation and liquidity as their primary considerations. Their prices tend to be less volatile and their net asset values are relatively easy to verify, making them suitable for testing secondary-market pricing mechanisms. Starting with lower-risk products and expanding the scope based on experience is also consistent with the SFC's stated approach.

Who benefits and who comes under pressure?

For investors, the most immediate change is the availability of trading outside normal market hours. Even when banks and exchanges are closed, investors can sell fund units on the platform and move their money to other uses immediately. This could be particularly useful for investors allocating assets across time zones.

However, the trades still take place through a licensed platform, while traditional roles such as fund custody remain in place. What has changed is the trading schedule and settlement speed. Secondary-market prices may not track net asset value closely, which is why the iNAV display and price-deviation alerts have been introduced. A commentary by mainland financial publication National Business Daily said the pilot remained at an early stage, with liquidity, cross-market pricing and investor-suitability risks still requiring observation.

The longer-term impact lies in the direction of fund flows. In the past, much of the capital in the cryptocurrency sector remained in decentralised finance (DeFi) protocols and stablecoin products, with limited compliant links to mainstream financial assets. The opening of tokenised funds to round-the-clock trading could, in theory, provide such capital with a compliant route into traditional, lower-risk yield products.

For traditional fund companies and custodian banks, management-fee income could come under pressure if customers shift in large numbers to lower-fee tokenised products. The role of custodians could also extend beyond simply holding assets to managing digital wallets and conducting on-chain security audits. It is worth noting that the pilot is being driven by a traditional fund company itself, with Huaxia Fund (Hong Kong) choosing to move first.

Two hearings on the same day: new and old economies

At the same time, Hong Kong Exchanges and Clearing disclosed on October 25 that two mainland Chinese companies had passed their listing hearings for the Main Board.

Suzhou Denglin Technology Co is principally engaged in developing and selling GPGPUs, or general-purpose graphics processing units, and focuses on private-cloud computing power using its proprietary heterogeneous architecture. Based on 2025 revenue, the company was China's third-largest supplier in the AI GPGPU market, although its market share was only 1.0%. Its joint sponsors are CITIC Securities, CITIC Securities International and BOCI. Denglin Technology applied for a listing under Chapter 18C of the Listing Rules as a "pre-commercial company", a category covering specialist technology companies that have not yet reached the commercialisation revenue threshold.

Sichuan Xinhua Pharmaceutical Pieces Co is a major Chinese supplier of traditional Chinese medicine decoction pieces. Based on 2025 revenue from such products, it ranked second nationwide, with a market share of 0.4%, reflecting the industry's highly fragmented nature. Its joint sponsors are GF Securities (Hong Kong) and ABCI. Xinhua has tried twice to list on the mainland's A-share market, and this is its third filing with the Hong Kong exchange since April 2025. Although Hong Kong already has Chinese medicine stocks such as China Traditional Chinese Medicine (0570.HK) and Tong Ren Tang Chinese Medicine (3613.HK), there are relatively few listed companies whose main business is traditional Chinese medicine decoction pieces.

One company is a pre-commercial AI-chip developer and the other a traditional Chinese medicine manufacturer. Their appearance alongside tokenised funds on the same day broadly reflects the current segmentation of Hong Kong's stock market: new-economy fundraising and old-economy listings are progressing in parallel.

Exchange tightens "nine-times limit" on the same day

Hong Kong Exchanges and Clearing also announced on October 26 that the SFC had approved amendments to the exchange rules. Except for structured products, the price-limit threshold for orders in all securities will be tightened from nine times to five times. From November 2, orders entered at a price five times or more away from the nominal price will not be accepted. The nine-times limit will remain for structured products. The exchange issued a circular on the matter as early as August. The new rule is widely seen as helping prevent mistaken orders and reducing abnormal volatility in small-cap stocks.

What to watch next

The first indicator is product expansion. Besides Huaxia, fund companies including Bosera International and Harvest Global Investments have also launched tokenised funds. Whether the second batch will include other issuers and VATPs, or extend beyond money market funds to other asset classes, will determine the scale of the pilot.

The second is trading volume and premiums or discounts. The viability of round-the-clock trading will depend on whether sufficient liquidity is available outside normal market hours and whether trading prices deviate significantly from net asset value.

The third is the investor base. The information released so far does not mention channels for mainland investors or southbound capital to participate. Whether these products ultimately attract local retail investors, overseas crypto capital or remain confined to a niche group will be revealed by trading data.