Hong Kong's Securities and Futures Commission has approved round-the-clock secondary trading of two tokenized money market funds managed by China Asset Management (Hong Kong), the first time tokenized public funds have traded this way on a licensed crypto platform anywhere in the world, the regulator said. Trading in the ChinaAMC HKD Digital Money Market Fund and the ChinaAMC USD Digital Money Market Fund started on Oct. 26.

For investors and corporate treasurers in Asia, the change means a regulated cash product can now be bought and sold at night and on weekends, because trades are matched between investors rather than processed by the fund manager. The SFC's chief executive, Julia Leung, told a Hong Kong FinTech Week panel on Monday that the regulator had authorized 17 tokenized retail products by September, with combined assets of US$1.3 billion, up 34% from a year earlier.

How PantherTrade's 24/7 fund trading works

The funds trade on PantherTrade (Hong Kong), an SFC-licensed virtual asset trading platform wholly owned by Futu Holdings, according to China Daily Hong Kong. ChinaAMC (HK) and Futu announced the partnership at a press conference on Oct. 26 and described it as the first retail secondary trading service of its kind.

The mechanics differ from a normal fund purchase. In secondary trading, existing fund units pass from seller to buyer, so the manager does not have to issue or redeem units or buy and sell the underlying assets for each trade, China Daily reported. That is what allows trades to happen when markets are shut.

Prices are set by matching buyers and sellers, not by the fund's net asset value. Steve Zeng, a managing director at Futu Holdings, said at the launch that the market price can stray significantly from that value, according to China Daily. To give investors a reference point, an independent third party calculates an indicative net asset value around the clock. PantherTrade also runs a mechanism modeled on the Hong Kong stock exchange's volatility control to limit extreme price swings, Zeng said.

The rules behind the launch date to April 20, when the SFC issued a circular setting up a pilot for secondary trading of tokenized SFC-authorized funds on licensed platforms. The framework builds on the commission's existing rules for exchange-traded funds and crypto venues, and covers how the trading channel operates, fair pricing, liquidity provision and disclosure, the regulator said.

What the SFC and ChinaAMC plan next

The first batch is limited to money market funds. The SFC said it will watch trading closely and may widen the range of eligible products over time, depending on market developments and what it learns from the pilot.

Elisa Ng, the SFC's executive director of investment products, said the launch adds "24/7 trading capability" to the city's tokenization ecosystem, and that it tests the commission's framework in live conditions.

The regulator also tied the move to Project Ensemble, the tokenization program it co-leads with the Hong Kong Monetary Authority for the asset management industry. The SFC said tokenized funds could eventually settle against tokenized deposits on the same digital rails, so an investor could sell fund units at any hour and move the proceeds instantly to another investment. On Monday, the HKMA announced 24/7 interbank settlement in central bank digital currency, a step Leung said would let tokenized deposits power around-the-clock real-value transactions, including trades in tokenized funds.

Katie He, executive director and head of strategic business at ChinaAMC (HK), said the product serves companies that manage treasury across time zones and retail investors who need to put money to work immediately, China Daily reported. She said the firm plans to extend tokenization to other asset classes, including bonds and commodities, and to integrate more closely with regulated digital currencies such as licensed stablecoins and central bank digital currencies. HSBC's licensed Hong Kong dollar stablecoin, RedCoin, is already rolling out to PayMe users.

Scale is the open question

Hong Kong's tokenized fund market is still small: US$1.3 billion spread across 17 tokenized retail products. Leung said tokenization is one of the main uses of blockchain in traditional finance, following a 2023 SFC circular that allowed the technology to be wrapped around investment products.

She argued that the industry will reach scale when tokenization becomes part of how markets normally operate, comparing the process to wiring a lighting grid in which each new connection lights more bulbs. The real test, she said, will come when investors pick tokenized products because they work better, not because they carry a blockchain label.

The SFC also said on Monday it plans to issue principles-based guidance for more autonomous artificial-intelligence tools and a cybersecurity framework for licensed firms, according to the synopsis of Leung's remarks.

The next marker for the tokenized fund pilot is whether the SFC admits products beyond money market funds. The regulator has set no timetable, and it said any expansion will depend on experience with the first two funds.