Tokenized investment products are entering a new stage in Hong Kong.
On October 26, 2026, the Securities and Futures Commission announced approval for secondary trading of two existing SFC-authorized tokenized money market funds on a licensed virtual asset trading platform.
The products are the ChinaAMC HKD Digital Money Market Fund and ChinaAMC USD Digital Money Market Fund. According to the regulator, around-the-clock secondary trading began that day.
The development moves the discussion beyond issuing fund interests on blockchain infrastructure. It creates an opportunity to assess how tokenized investment products function when investors can trade them in a secondary market.
1. From Fund Issuance to Secondary Trading
Subscription, redemption, and secondary trading serve different purposes.
Through subscription, an investor purchases interests issued by a fund. Through redemption, an investor returns those interests under the fund’s applicable terms.
Secondary trading introduces another route: buying or selling existing interests through a market.
Hong Kong’s updated tokenization guidance distinguishes between primary dealing and secondary trading. It permits secondary trading of eligible tokenized investment products on licensed platforms, subject to additional requirements.
For investors, this distinction affects how they enter and exit a position. A secondary market may provide another transaction channel, while subscriptions and redemptions continue to follow their own arrangements.
The usefulness of that channel depends on the quality of the market available.
Member Spotlight
2. Why Trading Hours Are Only Part of the Story
Around-the-clock availability is a visible feature. The more important commercial question is whether investors can complete transactions efficiently when they need to.
Consider a hypothetical investor seeking to sell fund interests outside conventional business hours.
An open trading platform provides an opportunity to submit an order. However, completing that order still requires a suitable buyer or available liquidity at an acceptable price.
Our assessment is that trading availability and market liquidity should therefore be evaluated separately.
A useful secondary market needs more than extended hours. It needs reliable participation, understandable pricing, and an orderly process for matching buyers and sellers.
3. Pricing and Liquidity Will Be Important Tests
The SFC’s April 2026 framework sets requirements covering trading channels, fair pricing, liquidity provision, disclosure, and client onboarding.
The framework is principally designed for on-platform secondary trading of SFC-authorized open-ended funds. Its stated objective is to support fair and orderly trading.
These requirements address practical market questions.
Can investors understand the price being offered? Is sufficient liquidity available for the order they want to place? Are the costs and conditions clearly explained?
For a hypothetical seller, the ability to trade immediately may be less attractive if the available price is unfavorable. Similarly, a buyer needs to understand the relationship between the traded price and the fund interest being purchased.
These are the kinds of considerations that will help determine whether the new trading channel becomes a regularly used service.
4. What This Means for Asset Managers
For asset managers evaluating tokenization, secondary trading adds another dimension to product design.
The assessment must cover how a product operates after issuance, including how ownership records, distribution arrangements, and trading processes interact.
Our view is that managers should begin with the investor experience:
How does an eligible investor access the product?
What information is available before a trade?
How are holdings recorded and serviced?
What happens if a transaction fails?
How does secondary trading interact with subscription and redemption?
Answering these questions can help establish whether tokenization improves an existing investment process.
A product’s blockchain component is valuable when it supports a clear operational or distribution benefit.
5. The Potential Connection With Tokenized Money
The SFC also identified a possible future connection with tokenized deposits through its collaboration with the Hong Kong Monetary Authority under Project Ensemble.
The regulator described how interaction between tokenized funds and tokenized money could support more efficient settlement and asset mobility. It presented these capabilities as an area for further development.
That distinction matters. Approval for secondary trading is an established development; a fully connected future settlement environment should not be assumed to be available in every transaction today.
6. What to Watch Next
For Tokenized Markets Weekly, the most useful indicators will be evidence of sustained market activity.
Trading volumes can show whether investors use the service repeatedly. Available liquidity and transaction costs can help reveal whether participation is practical. Reliable operations can demonstrate whether the service works consistently beyond its launch.
The SFC said it would monitor trading activity and consider expanding the product scope over time, taking market developments and experience into account.
Market Takeaway
Hong Kong’s latest development provides a concrete test of tokenized funds in a secondary-market setting.
Our assessment is that its significance will be determined through use: whether investors obtain a useful additional trading channel, asset managers can support it efficiently, and market participants maintain reliable pricing and operations.
The next stage of tokenization will depend on making digital investment products work throughout their lifecycle—from issuance and ownership to trading and settlement.
