Hong Kong’s exchange-traded product (ETP) market has expanded sharply, with daily turnover rising 3.6 times since 2023 to account for nearly one-fifth of trading on the stock exchange’s Main Board, Securities and Futures Commission (SFC) Chief Executive Julia Leung said.
The growth reflects efforts to broaden the range of investment products available to investors and improve market liquidity, including the development of active exchange-traded funds (ETFs), covered-call ETFs and spot virtual-asset ETFs, Leung said in a speech on October 9.
Hong Kong is now Asia’s third-largest ETP market by turnover, she said, highlighting the role of market-making arrangements, cross-border trading links, and international liquidity providers in supporting activity.
Thirty-one Hong Kong-listed ETFs are eligible for ETF Connect, which allows investors in Hong Kong and mainland China to access selected exchange-traded funds across the two markets.
Southbound trading has become an important source of activity, while global liquidity providers have accounted for more than 30% of market turnover in recent months, according to Leung.
The speech did not specify how much of the increase in ETP turnover was attributable to virtual-asset ETFs.
Hong Kong’s wider stock market has also recorded a significant recovery. Average daily stock turnover has exceeded HK$270 billion so far in 2026, up 160% from 2023, as the SFC and Hong Kong Exchanges and Clearing Ltd. (HKEX) pursue measures to improve trading conditions and reduce market frictions.
The initiatives include changes to collateral arrangements, lower client margin requirements for derivatives clearing and preparations for a move to a T+1 securities settlement cycle, under which trades would settle one business day after execution.
The first phase of a reduction in the client margin multiplier at HKEX’s derivatives clearing houses took effect in September, lowering it to 1.2 from 1.33. A further reduction to 1.1 is targeted for March 2027, subject to regulatory approval.
HKEX is also expected to publish consultation conclusions and a target implementation date for T+1 settlement, Leung said. The shift is intended to modernise market infrastructure and improve the efficiency of securities transactions.
Separately, changes to standardise board lots aim to make shares more accessible to investors by setting a maximum board-lot value of HK$50,000 and a minimum of HK$1,000.
The second phase, covering existing issuers, is scheduled for November alongside Hong Kong’s uncertificated securities market regime.
Leung said the SFC would continue working with HKEX and market participants to improve liquidity, strengthen price discovery and make capital markets more efficient.
The remarks were delivered at the Asia Securities Industry and Financial Markets Association’s Future of Liquidity in Asia Pacific Capital Markets Conference on October 9.
The SFC noted that the published speech reflected the prepared text and could differ from the remarks delivered.