Hong Kong SFC Modifies Leverage ETF Rules, Allows Daily Ratio Adjustments After SK Hynix Product Plunges 75%

Hong Kong's Securities and Futures Commission (SFC) modified leverage and inverse (L&I) product regulations on July 24, allowing fund managers to adjust leverage ratios daily within a 2x maximum limit to mitigate market volatility. The move follows significant losses in single-stock leverage products; an SK Hynix 2x leverage ETF issued by CSOP Asset Management declined approximately 75% from its peak as semiconductor stocks corrected, reaching record asset size of $16.8 billion before the sharp decline. The regulatory adjustment enables operators to reduce leverage ratios during high-volatility trading sessions to maintain operational flexibility, while mandating daily disclosure of next-day leverage levels to investors.
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