Hong Kong pushes for round-the-clock trading of digital assets

Hong Kong has stepped up efforts to bring tokenized investment products into everyday financial services, with regulators seeking closer links between digital money, around-the-clock trading and bank settlement systems.

Summary

• Hong Kong regulators are expanding commercial tokenization following recent launches of around-the-clock financial trading services.
• Approximately 200 financial industry professionals attended a joint seminar organized by the SFC and HKMA.
• Hong Kong has authorized continuous secondary trading of selected tokenized money market funds on licensed platforms.
• The HKMA's EnsembleTX infrastructure now supports round-the-clock interbank settlement of qualifying tokenized deposit transactions.
• Standard Chartered has introduced tokenized deposit services for corporate customers using Hong Kong's new settlement infrastructure.

In a Thursday announcement, the Hong Kong Monetary Authority (HKMA) and Securities and Futures Commission (SFC) said they had jointly hosted an industry seminar on November 11, attended by approximately 200 financial professionals.

The discussions followed two recent developments allowing approved tokenized investment funds to trade continuously and participating banks to settle tokenized deposits at any hour.

Hong Kong regulators push tokenized assets into everyday finance

Speaking after the seminar, SFC Executive Director of Investment Products Elisa Ng said Hong Kong was moving beyond early blockchain experiments toward services that financial institutions could use commercially.

"Tokenisation in Hong Kong is moving beyond experimentation towards commercialisation," Ng said.

She explained that the next stage would involve connecting tokenized investment products, digital currencies and financial infrastructure so that separate services could work together.

The seminar brought banks, asset managers and other financial businesses together to discuss how tokenization could support securities trading, corporate treasury management and payments.

Participants examined ways to improve liquidity management and the role licensed cryptocurrency trading platforms could play in making tokenized funds available to investors.

The regulators are particularly interested in connecting digital investment products with payment systems that operate outside conventional banking hours.

Ng said industry participation would help determine how the existing infrastructure could support additional commercial services.

HKMA Executive Director of Financial Infrastructure Nelson Chow said Hong Kong's financial infrastructure and growing selection of digital financial products provided a foundation for further development.

He added that the monetary authority would continue working with the SFC to support regulated tokenization services and cooperation among financial institutions.

Hong Kong allows 24/7 trading of tokenized investment funds

The latest discussions followed the SFC's October 26 approval of secondary trading in publicly offered tokenized money market funds on a licensed virtual asset trading platform.

The regulator authorized two existing investment products to trade continuously, allowing eligible investors to buy and sell fund interests outside traditional market hours.

Unlike ordinary fund subscriptions and redemptions, secondary market trading allows investors to transact with other market participants through an approved platform.

The arrangement covers tokenized investment fund units, which use blockchain technology to record or represent ownership interests in an underlying financial product.

However, the approval does not permit unrestricted trading of every tokenized security or investment fund in Hong Kong.

The SFC initially limited the framework to approved money market funds, with requirements covering pricing, liquidity provision, trading arrangements and investor disclosures.

Regulators said they would monitor market activity before considering whether additional tokenized investment products could qualify for similar arrangements.

The development follows Hong Kong's earlier efforts to make tokenized financial products available through regulated cryptocurrency platforms.

HKMA expands tokenized deposit settlement to 24 hours

Meanwhile, the HKMA has upgraded its EnsembleTX infrastructure to support continuous interbank settlement of tokenized deposit transactions using tokenized central bank money.

The monetary authority announced the upgrade on November 2, allowing participating financial institutions to complete qualifying settlement transactions outside conventional banking hours.

EnsembleTX is the pilot phase of Project Ensemble, which Hong Kong introduced to develop infrastructure connecting tokenized deposits with digital financial assets.

According to the regulator, participation has reached 12 banks and 20 industry pioneers, including financial institutions and asset managers.

The upgraded system builds on an earlier arrangement that used Hong Kong's real-time gross settlement infrastructure to process transactions involving tokenized deposits.

Banks and participating companies can now use the new capability to settle qualifying transactions throughout the day, including those connected with corporate cash management and tokenized investment funds.

As crypto.news previously reported, Hong Kong is preparing further trials involving regulated stablecoins and tokenized government debt.

The HKMA previously tested secondary market transactions involving tokenized Exchange Fund Bills as part of its work on digital settlement infrastructure.

Banks begin offering tokenized deposits to business clients

Commercial banks have begun introducing services that use Hong Kong's developing settlement infrastructure.

On November 2, Standard Chartered launched tokenized deposits for corporate customers in Hong Kong, using EnsembleTX to support transfers between participating institutions.

The service allows eligible businesses to transfer tokenized bank deposits outside standard operating hours, with settlement supported through the HKMA's infrastructure.

China Asset Management, Finloop and PantherTrade have participated in transactions involving tokenized deposits and money market funds through the system.

Separately, the HKMA has said that future Project Ensemble work will focus on expanding transaction activity and supporting more types of tokenized investment products.

Its November 12 statement confirmed that the authority and SFC would continue working with banks and industry participants to develop additional commercial uses for tokenized deposit settlement.