The Hong Kong Securities and Futures Commission has revised its regulatory framework to allow flexible leverage structures for leveraged and reverse products

The Hong Kong Securities and Futures Commission has issued a revised circular, stipulating that leveraged and reverse products with high capacity affected by market conditions must adopt flexible leverage structures. Under this structure, the leverage ratio can be adjusted daily within the existing upper limit (i.e. 2 times for leveraged products and -2 times for reverse products). Product providers may lower their target leverage ratio as necessary to manage products during periods of high trading volume. The leverage ratio of the product on the next trading day will be disclosed after the daily closing. The potential daily adjustment of leverage ratio reminds investors that leverage and reverse products are single day products and are not suitable for holding for more than one day. (Hong Kong Securities and Futures Commission)