Hong Kong Stock Exchange Launches Blockchain-Based Settlement Platform

HKEX says the system, used by traders in Hong Kong to buy stocks in China, will speed up settlement and provide greater transparency.

AccessTimeIconOct 4, 2023 at 8:17 p.m. UTC

The Hong Kong Stock Exchange’s Stock Connect system, which links Hong Kong’s stock markets with those in mainland China, is getting an upgrade thanks to blockchain technology.

According to a press release, the upgraded Stock Connect, dubbed Synapse, will incorporate smart contracts to help execute post-trade workflows and reduce settlement risk.

Synapse is able to simultaneously create settlement instructions for all parties along the settlement chain, facilitating concurrent processing, while also providing near-instantaneous status updates to all parties involved in the trade, a technical pamphlet explains, which is important when connecting traders in two different markets.

The average daily turnover of the Stock Connect totaled $15.302 billion (109.3 billion RMB) in the first half of 2023, up 5 percent from a year earlier, and a 50 percent increase from 2020 levels.

In Australia, the ASX has been advised to adopt blockchain technology to replace its settlement system called CHESS, the Australian Financial Review reported last year.

Synapse is scheduled to launch in Hong Kong on October 9.

Edited by Stephen Alpher.


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