Deep Tide TechFlow message. On July 24, the Hong Kong Securities and Futures Commission today issued a revised circular, which will require that leveraged and inverse products whose notional exposure is highly affected by market conditions must use flexible leverage structures. Under this structure, the leverage multiplier can be adjusted daily within the existing upper limits (i.e., leverage products at 2x and inverse products at -2x).

Therefore, when necessary, product providers may reduce the target leverage multiplier of such products, allowing more room to manage them during periods of high trading volume. The leverage multiplier for these products on the next trading day will be disclosed after daily market close. The potential daily adjustments to the leverage multiplier will also help deepen investors’ understanding that leveraged and inverse products are single-day products, reminding investors that such products are not suitable to hold for more than one day.