On 20 april, the press association news service (journalist zhao zhou zhou wei) issued a summary of consultations to optimize the listing of structural products, amending chapter 15a of the rules of listing and lowering the threshold for the issuance of permits for dwelling ships and bear bears, which will be implemented in two phases: may and july, respectively. What are the advantages and implications of this revision for investors
As early as 30 september 2025, jci issued a consultation paper to consult the market publicly on proposals for the optimization of the system for the listing of structural products. The consultation period lasted six weeks, at which time it was clear the direction of reforms such as lowering the distribution threshold. This programme of excellence is the official response and landing of the previous market opinion。
Specifically, this revision of chapter 15a of the rules of listing focuses on the following three elements:
Minimum issue price: the minimum issue price of a derivative licence will be increased from hk$0. 25 to hk$0. 15. The minimum issue price requirement for the cow bear certificate will be removed
2. Minimum market value: the minimum market value requirement at the time of issue of the derivative certificate and the bear certificate will be reduced from hk$10 million to hk$6 million
Replicating distribution: except for the issue price and the size of the issue, the product terms of the replica must be identical to those of the existing issue。
The three above-mentioned amendments relating to the major product provisions will enter into force on 1 may 2026, the remaining amendments to the listing rules will enter into force on 1 july 2026 and the new regulations will be implemented step by step. In addition, jci provides a 12-month transition period for existing issuers and guarantors and will issue additional guidance to assist issuers in complying with the requirements。
The current framework for the listing of structural products in the hong kong market has been in place for many years, from the roll-out of the durch in 1988 to the arrival of the bear and bear certificates in 2006, the product has been continuously upgraded, while changes in the market environment and the demand of investors have either pre-empted the system。
The revision and optimization of the code is the result of a re-examination of the original framework at the regulatory level in hong kong, with the central aim of providing greater flexibility to the market, further activating the market for structural products and promoting its continued healthy development。
In response, wu jiechi, the head of the hong kong trade centre, said that an optimized listing system would promote product innovation and that the reform would make the mechanisms more resilient and flexible and would further enrich the multi-asset ecosystem of hong kong exchanges。
Many advantages of structural products are popular with investors
In the hong kong stock market, structural products are commonly referred to as highly leveraged short-line tools such as dhows and bear certificates. The two are characterized by high leverage ratios, high price volatility, better suited to short-line gaming or hedge risks, and a certain risk to the participation of ordinary investors。
As a “middle power” for exchange of shares in ports, nesting vessels and bear certificates account for 15-20 per cent of the total volume of trade in hong kong stock, and are the core instruments for bulky participation in highly leveraged transactions and for agency risk hedging. The hong kong derivatives market has also been at the top of global trade in structural products for 17 consecutive years. This popularity of investors also stems from the following four main advantages of structural products:
One is diversification of investment options. Structural products cover a wide range of investment options and products that track hong kong indices, currencies or parts of commodities
Second is capital efficiency. Structural products are generally leveraged and investors pay lower entry costs and can seek investment returns in different market situations
Third is the flexibility of trading strategies. Investors can develop diversified trading strategies, including high-frequency transactions, average return, etc.
Fourthly, when some of the market's stock prices have been innovative, investors can take the risk of rushing through, for example, buy-in licences。
This rule optimizes landings and marks the re-upgrading of the market system for derivatives from the port stock, which has important implications and value for all market participants. For product distributors, lower costs contribute to the introduction of more products and more types; for investors, they are more in tune with demand, lower entry thresholds or more transactions are expected。
What's the difference between a wheel and a bear certificate “playing”
To understand this new rule, it is necessary to clarify the “genetic” differences between the two core products: the wheel and the bear. In fact, both are highly leveraged field contracts and cash settlements issued by third-party financial institutions, which, because of their different birth contexts, create distinct transaction logic and risk characteristics, which are the main basis for optimizing the relevant rules in the context of the convergence。
In 1988, jci opened up the issue of derivatives (i. E., divulgation) in order to fill the market gap in common bulk stock trading and multi-space operations. Dwelling wheels are divided into higher subscriptions and lower recognitions, pricing is influenced by three factors: positive stock increases and falls, time value losses, market volatility, no mandatory recovery mechanism, only zero dues, and complex pricing logic makes it easier for new hands to step on。
In order to correct the rooster pain point, in 2006 jcx launched an improved version of the cbbc certificate, divided between a cow's card and a bear's certificate. Its core optimization is the removal of the effects of volatility, with prices almost entirely following the linear rise and fall of the positive shares, with the addition of a mandatory recovery mechanism, namely, a positive share touching the pre-set price recovery, an immediate exit from the market, a zero principal and a weak time frame and a better match to the super-short-line pure-direction game。
In conclusion, the core difference between the two is that the wheel focuses on band-to-volatility trading, with risks arising from fluctuations in time consumption and volatility, and that ox and bear certificates are short-lined, with the core of the risk being forced recovery mechanisms. In the exercise process, investors prefer to trade the wheel when the stock is volatile and long, while investors prefer to trade the bear and bear certificates when the stock is small and the hold is short。
Revision of optimization closer to bulk investor demand
Dwelling wheel and bear certificates have also witnessed the maturity and development of the hong kong stock derivatives market, ranging from filling market gaps to becoming a major trading force in the hong kong market. In turn, the rules of this jcc have been optimized, and more so a dynamic upgrading of the system, both to match the iterative demand for products and to match the actual market transactions, giving a new dynamism to the market for hong kong stock derivatives。
This rule optimizes the balance between flexibility and compliance. In the pricing of issuances, the minimum issuing price of a derivative licence has been lowered from hk$0. 25 to hk$0. 15, and the elimination of the minimum issuing price of a cub and bear certificate will significantly increase the flexibility of the agreed price for issuances and better match the demand of the bulk investor。
Second, the distribution scale threshold has been eased simultaneously, and the minimum market value of the dweller and bear certificate has been reduced from hk$10 million to hk$6 million, reducing distribution costs and contributing to the supply of small and medium-sized products。
It is a matter of concern that, while the issuance threshold has been eased, the jci has further tightened the model of issuing rules to protect investors ' interests。
It is important to emphasize that the high leverage attributes of structural products determine the nature of their “high returns, high risks”. At the heart of the system's optimization is the broadening of trade options and the activation of markets, not the lowering of the risk threshold for the product itself. For millions of investors, no matter how well the rules are optimized, adherence to the risk threshold and the blind pursuit of high leverage are central prerequisites for engaging in derivative transactions。
