Zhitong Finance App learned that on July 24, the Hong Kong Securities and Futures Commission (Hong Kong Securities Regulatory Commission) issued a revised circular aimed at optimizing the regulatory framework for approving leveraged and reverse products, so that product providers can manage their products more flexibly, and at the same time remind investors of the characteristics of such products as single-day trading tools.
The Hong Kong L&I Products (L&I Products) market has grown significantly since the beginning of 2026, mainly driven by the rapid development of Single Stock Leveraged and Inverse Products (Single Stock Leveraged and Inverse Products). As a result, the operation of these products increasingly relies on the ecosystem associated with the underlying stock to maintain target leverage exposure.
In this rapidly changing market environment, the Hong Kong Securities Regulatory Commission will stipulate that leveraged and inverse products whose capacity is highly affected by changes in market conditions must adopt a flexible leverage structure. Under this structure, the leverage ratio can be adjusted daily within the current limit (that is, 2 times for leveraged products and -2 times for reverse products). Therefore, product providers can lower the target leverage ratio for such products when necessary, so that they have more room to manage products during periods of high trading volume. The leverage ratio for these products on the next trading day will be disclosed after the daily market closes. The potential daily adjustment of the leverage ratio also helps to deepen investors' understanding that leveraged and inverse products are single-day products, reminding investors that such products are not suitable for holding such products for more than one day.
This optimization measure takes a balanced approach. By disclosing target leverage multiples on a daily basis and reducing the risk of significant tracking deviations when the market environment changes rapidly, it helps support the orderly operation of leveraged and reverse products under different market conditions, and also maintains the effectiveness of such products as single-day trading and hedging tools for investors.
Ms. Wu Jiali, Executive Director of the Investment Products Division of the Hong Kong Securities Regulatory Commission, said, “These optimization measures are timely adjustments in response to the evolving market environment. The aim is to support the sustainable development of the market while ensuring that appropriate investor protection measures are maintained. The update also helps investors to better understand the nature and complexity of leveraged and inverse products as single-day products. Before investing, investors should understand the characteristics and associated risks of such products, distinguish them from products suitable for overnight or long-term holding, and carefully assess whether such products are suitable for their investment needs.”
To enhance transparency, the Hong Kong Securities Regulatory Commission also requires leveraged and inverse product providers to publish target leverage multiples for the next trading day on their product websites and the HKEx website after daily market closing. Their product names should also reflect flexible leverage characteristics and maximum leverage multiples.
The Hong Kong Securities Regulatory Commission reminds investors that leveraged and inverse products are not designed to be held for more than one day, as their performance may deviate significantly from the performance of related assets under such circumstances. To help investors understand such complex products, the Hong Kong Securities Regulatory Commission has issued an infographic with the theme “D-A-I-L-Y” to provide investors with inspection forms and urge them to conduct daily assessments when trading leveraged and inverse products.
