Hong Kong Opens 24/7 Trading of Tokenized Money Market Funds

Hong Kong opened 24-hour secondary trading for two tokenized money market funds on Monday. The Securities and Futures Commission (SFC) said it is the world's first such trading of tokenized public funds.

The two products are ChinaAMC's HKD and USD Digital Money Market Funds. Their token shares now trade on PantherTrade, an SFC-licensed crypto exchange, according to a ChinaAMC shareholder notice filed with HKEX on Oct. 23. Buying from and redeeming with the fund itself stays open.

For crypto traders, the change is about timing. A tokenized fund share can now be sold on a Saturday night instead of waiting for the fund's next dealing day.

Market makers and a 15-second price check

The SFC wrote the rules in an April 20 circular. It asks fund managers to arrange at least one market maker per fund, with three months' notice before one quits. It also requires the licensed exchange to post an indicative net asset value (a live estimate of what each share is worth), typically updated at least every 15 seconds, and warn buyers when a trade price strays too far from it.

The same circular tells platforms to warn clients about very thin trading and large premiums or discounts outside Hong Kong market hours and on weekends.

"We will continue to strengthen Hong Kong's position as a pioneer in tokenization by facilitating responsible innovation while safeguarding investors," Elisa Ng, the SFC's executive director of investment products, said, as quoted by The Standard.

The regulator said it will watch the first trades before deciding whether to let other kinds of funds in.

In our opinion: the number to chase is the price gap on the first weekend. A money fund trading close to its own value at 3 a.m. on a Sunday would say more than any launch release.