Hong Kong SFC Sets Rules for VATP Operators Accepting Affiliated Market Makers, February 2026

The Hong Kong Securities and Futures Commission issued Circular SFO/IS/006/2026 on 11 February 2026, setting out the regulatory requirements and expected standards for SFC-licensed virtual asset trading platform operators (Platform Operators) that wish to permit an affiliated company to conduct market making on their platforms (Affiliated Market Makers, or AFMMs). The circular implements Pillar A (Access) of the SFC's ASPIRe roadmap, which identifies liquidity enhancement as a priority. The guidance takes effect immediately and applies to all VATP licence holders under the Securities and Futures Ordinance (Cap. 571).

Under paragraph 13.1 of the SFC's Guidelines for Virtual Asset Trading Platform Operators (VATP Guidelines), a Platform Operator must avoid, and ensure that its associates avoid, any material interest in a transaction with or for a client or any relationship giving rise to a conflict of interest. Paragraph 13.3 of those Guidelines previously prohibited group companies from conducting proprietary trading through the Platform Operator absent individual SFC permission. Circular SFO/IS/006/2026 creates a standing permission for AFMM market making, conditioned on the operator: (a) ensuring the AFMM is functionally independent; (b) maintaining information barriers and data security; (c) ensuring client orders always have priority over AFMM orders at the same price level; (d) identifying AFMM trades in post-trade data; and (e) disclosing all preferential treatment to clients.

Before allowing an AFMM to begin market making, a Platform Operator must notify the SFC in writing and submit an independent professional firm's report confirming that its policies and controls comply with the Terms and Conditions for an AFMM set out in the circular's Appendix. The notification must be signed by the manager-in-charge of overall management oversight (MIC OMO) and must include an undertaking to suspend AFMM activity immediately upon any breach of the Terms and Conditions that carries significant client impact as determined by the SFC.

Existing VATP operators that rely on affiliated companies for liquidity must assess whether their current arrangements satisfy the functional independence and conflict management requirements before submitting the required notification. The SFC did not specify a transition period, meaning operators must achieve full compliance with the Terms and Conditions before submitting the SFC notification.

Source: Securities and Futures Commission, Circular SFO/IS/006/2026, "Circular on permitting virtual asset trading platform operators to accept affiliated market makers," issued 11 February 2026. Official URL: https://apps.sfc.hk/edistributionWeb/gateway/EN/circular/intermediaries/supervision/doc?refNo=26EC6. Confirmed 19 March 2026.

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