Hong Kong Exchange Launches New Settlement Platform to Connect with Users in China

Hong Kong Exchanges and Clearing Limited (HKEX), which operates a range of equity, commodity, fixed income, and currency markets, has unveiled an equities settlement acceleration platform called “Synapse.” 

The newly launched platform will leverage smart contracts programmed in DAML to streamline post-trade processes and improve operational efficiencies, according to a Wednesday press release. 

Synapse will be integrated into Stock Connect, an HKEX channel that enables international investors to access over 1,000 mainland Chinese stocks through routing in Hong Kong. 

“This technology-empowered platform will not only improve post-trade efficiencies, but will, over time, build a better, stronger ecosystem, supporting both market growth and investor growth strategies,” Glenda So, HKEX Group Head of Emerging Business and FIC, said. 

“We are very proud to be introducing Synapse to our market and we look forward to continuing to embrace new technologies that benefit our markets and our customers in the future.”

HKEX mentioned that its Stock Connect platform has been performing exceptionally well. 

The firm said that the average daily turnover of Northbound Stock Connect reached RMB 109.3 billion in the first half of 2023, marking a 5% increase compared to the previous year and a significant 50% surge from 2020 levels.

HKEX is the operator of The Stock Exchange of Hong Kong, Hong Kong Futures Exchange, and London Metal Exchange.

HKEX to Link Synapse With The Depository Trust & Clearing Corporation (DTCC)

HKEX will establish a connection between Hong Kong’s Depository Trust and Clearing Corporation via its Institutional Trade Processing service, facilitating centralized matching of cross-border transactions. 

This integration will automate the generation and transmission of settlement instructions back to the Synapse platform, streamlining the trade confirmation workflow.

“With this integration, global investors and HKEX participants will benefit from the central matching of cross-border transactions using DTCC’s CTM service, which will automatically generate and send settlement instructions to the Synapse platform, streamlining the trade confirmation and settlement notification process,” the announcement read. 

The Synapse platform is scheduled for launch in Hong Kong on October 9.

While Hong Kong has been positioning itself as a hub for Web3 companies with recent developments such as the introduction of retail trading for licensed crypto exchanges in August, it has also faced challenges. 

Just recently, the city witnessed the largest Ponzi scheme in its history, involving the embezzlement of approximately $166 million from JPEX crypto exchange users. 

The investigation into the incident is currently ongoing.

Meanwhile, analysts and industry experts have voiced concern that the fallout from the JPEX debacle will present significant challenges for virtual asset companies and hinder the government’s efforts to expand the sector.

“At a time when people still don’t completely understand what Web3 is, the JPEX case has created a negative impression for people in Hong Kong on digital assets and the broader Web3 industry,” Cyrus Ip, a crypto venture investor and chief business officer at artificial intelligence start-up DreamWld Technology, said.