On 3 November 2025, the Securities and Futures Commission ("SFC") issued the "Circular on shared liquidity by virtual asset trading platforms" ("First Circular") and the "Circular on expansion of products and services of virtual asset trading platforms" ("Second Circular").
The First Circular sets out the SFC's regulatory approach and expected standards for SFC-licensed virtual asset trading platform ("VATP") operators to integrate their order books with overseas, affiliated platforms. This initiative, a key part of the "Access" pillar of the SFC's ASPIRe roadmap, aims to improve market efficiency, provide Hong Kong investors with access to deeper global liquidity, tighten price spreads, and enhance price discovery.
The Second Circular aims to broaden the range of products and services that can be offered by the SFC-licensed VATP, which forms a key part of the "Products" pillar of the SFC's ASPIRe roadmap.
This alert summarises the key requirements and implications for SFC-licensed VATP operators following these two developments.
The First Circular
The Shared Order Book Framework
The new framework permits SFC-licensed VATP operators to combine their orders with those of global affiliate virtual asset trading platform operator ("OVATP") into an aggregate shared liquidity pool, enabling order matching and execution across platforms ("Shared Order Book"). However, the framework introduces settlement exposure and increases operational complexity of market surveillance.
Key Regulatory Requirements
In light of the heightened risks from the Shared Order Book operation, VATP operators offering Shared Order Books are required to implement the following measures. VATP operators seeking to offer this service must obtain prior written approval from the SFC, with specific terms and conditions imposed on their licence.
The Second Circular
Under the Second Circular, the SFC expands the products and services that can be offered by SFC-licensed VATPs by (i) modifying the requirements on token admission; (ii) clarifying current regulatory requirements on VATPs for the distribution of tokenised securities and investment products relating to digital assets; and (iii) updating the requirements on VATPs providing custody services for their clients’ digital assets which may not have been made available for trading via the VATP.
Concluding Remarks
The two Circulars collectively represent a major strategic and regulatory shift. Licensed VATPs now have a pathway to access deeper global liquidity and evolve into more comprehensive digital asset intermediaries by offering a wider product suite and specialised services.
However, these new opportunities come with stringent obligations. VATPs pursuing shared liquidity must build robust systems for cross-border DVP settlement, real-time exposure monitoring, and unified surveillance. Those expanding their product and service offerings must strengthen their due diligence, risk management, and compliance frameworks to meet the SFC's expectations, particularly when acting as distributors.
Howse Williams' regulatory team is prepared to guide licensed VATPs through these developments by assisting with SFC applications and developing the robust compliance systems required to leverage new opportunities in shared liquidity and expanded services.
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