The Hong Kong Securities and Futures Commission issued a circular on "Tokenization of Investment Products Recognized by the SFC."

2023-11-02 20:11:29
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ChainCatcher news, the Hong Kong Securities and Futures Commission (SFC) has issued a circular titled "On the SFC's Recognition of Tokenization of Investment Products." The SFC believes that it is appropriate to allow primary trading of tokenized investment products authorized by the SFC, provided that these products can meet all applicable product authorization requirements and additional safeguards to address issues, through a transparent approach.

The circular points out that secondary trading of tokenized investment products authorized by the SFC will be considered more cautiously and carefully, in order to provide a level of investor protection that is fundamentally similar to that for investors in non-tokenized products. These considerations include maintaining appropriate and timely records of token ownership, the readiness of trading infrastructure and market participants to support liquidity, and fair pricing of tokenized products. Additionally, product providers of tokenized investment products recognized by the SFC must ensure that the underlying products comply with the applicable requirements of relevant rules, regulations, and product codes (including the qualifications of product providers, product structure, investment and operational requirements, disclosure, and ongoing compliance obligations).

Furthermore, new investment products with tokenization features that plan to seek SFC approval must consult the SFC in advance. Tokenization of existing investment products authorized by the SFC also requires prior consultation.

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