Proprietary trading firms, no matter how large or influential, will not benefit from the city’s proposed 0% tax concession on carried interest and performance fees. That original framework offered a 0% profits tax rate on eligible carried interest. When the tax rate on that income is the difference between 0% and Hong Kong’s standard 16.5% profits tax rate, the stakes get material fast. At those compensation levels, a 16.5% tax rate on a $50 million carry payout works out to $8.25 million in tax. What this means for prop trading firmsFor proprietary trading operations, these firms generate returns by deploying their own capital, often through high-frequency strategies, market making, or quantitative approaches.