#香港拟年内再推虚拟资产指引 The Introduction of the Affiliate Market Maker System: Hong Kong's Crypto Market Bids Farewell to the "Liquidity Shortage" Puzzle

On February 11, 2026, the Hong Kong Securities and Futures Commission (SFC) issued a circular regarding the approval of virtual asset trading platform operators to accept affiliated market makers, marking a key move in the "three arrows" strategy (guaranteed financing, perpetual contracts, introduction of market makers): the first time licensed virtual asset trading platforms (VATPs) are permitted to have affiliated companies act as market makers on their platforms.

As Dr. Ye Zhi Heng, Executive Director of the SFC's Intermediaries Division, stated: "Liquidity is not endogenous; it must be cultivated within an open market environment and under precise regulatory design." This is not a simple relaxation of restrictions but a profound reform aimed at reshaping the market microstructure, addressing excessive bid-ask spreads, and increasing trading probability. It signifies that Hong Kong's virtual asset market is transitioning from the "compliance regulation phase" to the "deep water operation phase."

Current Pain Points: Why Does Hong Kong Urgently Need Affiliate Market Makers?

Since the licensing regime was implemented in 2023, licensed exchanges in Hong Kong have addressed issues of "compliance" and "security," but "low liquidity" remains an intractable problem.

In traditional securities markets, market makers (liquidity providers) serve as the "lubricant" of the market. However, under Hong Kong's previous regulatory framework, to prevent conflicts of interest, the SFC generally prohibited affiliated parties of licensed platforms from engaging in market making. This resulted in licensed platforms facing clear disadvantages in bid-ask spreads and order book depth when competing with offshore exchanges, making it difficult to retain large institutional clients.

Systemic Reshaping: From "Strict Prohibition of Affiliations" to "Regulatory Transparency"

According to the latest circular issued on February 11, the SFC officially abolished the absolute ban on affiliated companies acting as market makers and instead established a highly stringent compliance access framework. The core logic of this move is to acknowledge conflicts of interest but eliminate the risk through "firewalls."

1. Firewalls to Eliminate Conflicts of Interest
Affiliated companies wishing to act as market makers must meet the following conditions:

Functional Independence: The market-making business must be completely isolated from platform operations in terms of personnel, office space, and decision-making processes.

Data Security and Information Barriers: It is strictly forbidden for the platform to disclose sensitive customer order book information to affiliated market makers, preventing front-running phenomena.

2. Customer Order Priority Principle
This is the core red line of the new regulation. The existence of affiliated market makers must never harm customer interests. During trade matching, customer limit orders must be executed before the market maker’s quotes, ensuring fairness for retail and institutional investors from a systemic perspective.

3. Transparency of Market-Making Activities
In the past, gray market-making activities often operated behind multiple accounts. The new regulation requires:

Real-time Disclosure: Platforms must report all trading data of affiliated market makers to the SFC in real time.

Identification and Marking: Effective identification of market-making activities to prevent wash trading and price manipulation.

Four Profound Impacts: Hong Kong Crypto Market’s "Second Leap"

The introduction of the affiliate market maker system will fundamentally change the competitive landscape of Hong Kong’s crypto market:

First, Narrowing Bid-Ask Spreads and Reducing Friction Costs
Through continuous two-way quotes from affiliated market makers, bid-ask spreads that once reached dozens of basis points (bps) are expected to narrow significantly. For professional investors and high-net-worth clients, this means lower slippage costs, which will directly attract funds that previously flowed to offshore markets back to Hong Kong.

Second, Improving Price Discovery Mechanisms
Market makers’ involvement can effectively smooth out sharp price fluctuations caused by sudden large buy or sell orders, making prices on licensed platforms more meaningful as references. Hong Kong’s platforms will no longer just follow global prices but could become the "pricing center" for the Asian time zone.

Third, Supporting Perpetual Contracts and Other Derivatives
The newly launched "Virtual Asset Perpetual Contract" regulatory framework demands high liquidity. Without sufficient depth in the spot order book, derivatives are prone to margin calls due to lack of liquidity. Affiliated market makers can provide the underlying support for upcoming leveraged products.

Fourth, Strengthening the "Ecological Advantage" of Compliant Platforms
This means licensed platforms are no longer isolated "intermediaries" but can integrate group resources (such as quantitative departments and proprietary trading teams) for coordinated operations. This enhances the revenue-generating capacity of licensed platforms, enabling reinvestment into technology and investor education.

A Systematic Complement to the ASPIRe Roadmap
The 2025 "ASPIRe" roadmap clearly aims to establish Hong Kong as a "trustworthy and resilient" digital asset hub. The package of new regulations introduced in February 2026 (financing, perpetual contracts, market makers) precisely fulfills this vision.

The affiliate market maker system is not only a means to enhance liquidity but also a cornerstone for "boosting investor confidence." Market makers operating transparently under sunlight are far more reassuring than manipulators lurking in the shadows.

Hong Kong is demonstrating to the world: it not only has strict rule of law but also pragmatic financial wisdom. The entry of affiliate market makers marks just the beginning of Hong Kong’s "Great Voyage" in the crypto market.