Hong Kong Exchanges and Clearing Limited is set to implement an upgrade to its Stock Connect system with the launch of HKEX Synapse, a cutting-edge blockchain-based settlement platform, HKEX said in a statement.
This upgrade, scheduled for October 9, leverages smart contracts to enhance post-trade workflows and mitigate settlement risks in the Hong Kong Stock Exchange’s Stock Connect system, which facilitates connections between Hong Kong and mainland China’s stock markets.
The HKEX Synapse platform aims to drive operational efficiency, reduce settlement risks, and enhance transparency by integrating smart contracts into post-trade processes.
As part of the Stock Connect market access program, HKEX Synapse represents a significant step toward fostering international participation in Mainland China’s equity markets.
Glenda So, HKEX Group Head of Emerging Business and FIC, stated, “We are delighted to launch HKEX Synapse, a major enhancement to our Stock Connect infrastructure that will support the next phase of growth for international participation in Mainland China’s equity markets.”
The technology behind HKEX Synapse is powered by the open-source smart contract language DAML, known for its ability to synchronize data across both blockchains and centralized databases.
This innovative platform facilitates concurrent processing by generating settlement instructions for all parties along the settlement chain simultaneously.
Moreover, it provides near-instantaneous status updates to all stakeholders involved in the trade, a crucial feature when connecting traders operating in two distinct markets.
The Stock Connect system has witnessed significant growth, with an average daily turnover of $15.302 billion (109.3 billion RMB) in the first half of 2023—a 5 percent increase from the previous year and a substantial 50 percent surge from 2020 levels.
