Hong Kong Plans to Include Proprietary Trading Firms in 'Big Bang' Tax Reform
Alina Collins
Hong Kong is considering extending its 'big bang' tax overhaul — originally aimed at funds and family offices — to proprietary trading firms like Jane Street and Citadel Securities, a move that would widen tax breaks from 'managing other people's money' to 'trading your own.'
What does this tax overhaul actually change?
A bill submitted to Hong Kong's Legislative Council in June aims to attract more funds and family offices to set up in the city.
It broadens the range of investment gains eligible for carried interest — the share of profits fund managers take home — taxed at a low rate, extending beyond private equity to hedge funds, venture capital, private credit, and family offices.
In plain terms = the tax break used to be a PE-only perk; now almost anyone who manages money professionally can use it.
Why are prop-trading firms being pulled in?
Two people familiar with the matter say officials are studying amendments to the bill or administrative guidance that would exempt prop-trading employees' performance-linked pay from tax.
The key distinction: prop-trading firms trade with their own capital or employee funds, not on behalf of pensions, sovereigns, or wealthy individuals.
This means → Hong Kong's tax logic is shifting — from "whose money do you manage?" to "can we keep your trading desk here?"
What have Jane Street and Citadel Securities done?
Jane Street last year leased six floors of a new Hong Kong waterfront property at $4 million a month, a high-profile commitment to the city.
Citadel Securities is also reportedly expanding in Hong Kong.
This reflects a broader pattern: top global prop-trading firms are already voting with their wallets, and Hong Kong's tax move is a direct response.
How will it land — and who actually benefits?
Two possible paths: amend the bill text during legislative review, or issue administrative guidance clarifying that traders qualify for the tax break.
Sources caution that not all prop-trading firms will necessarily benefit — eligibility will depend on specific conditions and thresholds.
The government said the proposed incentives are "not limited to specific types of funds or asset managers" but depend on whether the relevant conditions and requirements are met.
Content is for reference only, not financial advice.