HKEX Plans to Launch a New Settlement Acceleration Platform

The Hong Kong Exchanges and Clearing Limited (HKEX) introduced a new settlement acceleration platform for its Stock Connect programme to make the post-trade processes efficient for global investors accessing the Mainland China market.

Dubbed ‘HKEX Synapse’, the new platform will be based on DAML smart contracts. The exchange plans to make the post-trade workflows of Stock Connect more efficient and streamlined. The increased capacity and better connectivity will manage the growing volume.

HKEX has partnered with The Depository Trust & Clearing Corporation (DTCC) to link HKEX Synapse to DTCC’s Institutional Trade Processing (ITP) services. The smart contract-based solution will facilitate institutional investors to handle their post-trade operations in a better way at Northbound Stock Connect across different time zones.

Commenting on the latest announcement, Charles Li, Chief Executive of HKEX, said: “Synapse is our latest Stock Connect innovation and will be of major benefit to global investors when they trade through Northbound Stock Connect. Embracing new technology to further develop our markets is a cornerstone of our strategy, and we are delighted to work together with DTCC and Digital Asset on this exciting new enhancement to our landmark mutual access programme with Mainland China.”

According to HKEX, the interest of institutional investors in Northbound Stock Connect has grown significantly after the inclusion of China’s A-shares in major global indices. The average daily turnover in the first three quarters of 2020 at Stock Connect increased more than 100% to RMB 90 billion, compared to the same period in 2019.

“By deploying DAML smart contracts, HKEX Synapse will be able to simultaneously create settlement instructions and provide status updates to all parties along the settlement chain, facilitating concurrent processing and greatly improving transparency for market participants. HKEX Synapse is an optional platform and is expected to begin testing in 2021 with a group of pilot users, ahead of production deployment targeted for Q1 2022,” the official press release states.

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