Hong Kong IFEC Warns of Risks in Buying and Selling Tokenized Funds on Secondary Markets

Shenchao TechFlow reported that on Oct. 28, the Investor and Financial Education Council of Hong Kong (IFEC) issued a notice warning of risks in buying and selling tokenized funds on secondary markets, including price divergence/trading risk, liquidity risk, price fragmentation risk, and reliance on market makers.

The IFEC stated that investors should fully understand the underlying funds, including their investment objectives, strategies, features, operations, and related investment risks, as well as the tokenization arrangements, including whether transactions are ultimately settled on-chain or off-chain and the related risks. Investors should also pay attention to information on trading channels, market maker arrangements, applicable fees, possible trading suspensions, secondary market trading risks, the option to subscribe for or redeem tokenized fund units at net asset value (NAV), and related implications.

Source: Shenchao TechFlow