The Hong Kong Securities and Futures Commission issued a revised circular updating its framework for authorised leveraged and inverse products in Hong Kong. The central change is that L&I Products whose capacity is highly dependent on changing market conditions must adopt a flexible leverage structure, allowing the targeted leverage factor to vary each day within existing caps. Providers must publish the targeted leverage factor for the next trading day after market close, giving them more room to manage products in stressed or high-volume sessions while making the products’ daily trading nature clearer to investors. The update comes as Hong Kong’s L&I Products market has expanded significantly since the start of 2026, led by Single Stock L&I Products, whose ability to maintain target exposure depends more heavily on liquidity, counterparty capacity and other features of the underlying stock ecosystem. Leveraged products remain capped at 2x and inverse products at -2x, but providers may lower the target leverage when needed. Single Stock L&I Products in general, and certain index-based L&I Products depending on underlying liquidity, leverage factor and market conditions, are likely to use the flexible structure. Product names must indicate both the flexible leverage feature and the maximum leverage factor, and disclosures must direct investors to the product website and the Hong Kong Exchanges and Clearing website for each day’s target leverage. The revised circular also incorporates and supersedes the SFC’s 2020 L&I circulars and reiterates that these products are designed for daily trading or hedging rather than holding beyond one day.

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