Digital Assets: HKEX Launches Smart Contracts-Powered, T+0 Settlements Via Stock Connect

October 5, 2023 | Digital Assets, News
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“HKEX Synapse is 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.” – HKEX Group Head of Emerging Business and FIC, Glenda So.

Hong Kong Exchanges and Clearing Limited (HKEX) has introduced a groundbreaking settlement acceleration platform named HKEX Synapse, aimed at bolstering market efficiency and transparency. This innovative platform is set to launch on October 9, 2023, and is designed to revamp post-trade operations within the Stock Connect program, which serves as a bridge between Mainland Chinese markets and Hong Kong.

The key feature of Synapse is its use of DAML smart contracts, a cutting-edge technology, to standardize and simplify post-trade workflows. This integration promises to heighten operational efficiency, minimize settlement risks, and offer increased transparency to market participants. It’s a significant step forward in HKEX’s commitment to enhancing Stock Connect, a vital channel for investors in both Mainland China and Hong Kong. (Mondovisione)

Synapse offers real-time visibility into the settlement process, doing away with sequential processes that slow things down. This benefits a wide range of market participants, including asset managers, brokers, custodians, and clearing participants. They can now enjoy real-time data synchronization and improved scalability to handle the growing volume of trades facilitated by Northbound Stock Connect.

Notably, daily turnover through Northbound Stock Connect saw a substantial increase, reaching RMB 109.3 billion in the first half of 2023, reflecting a 5% rise from the previous year and an impressive 50% jump from 2020 levels.

Glenda So, HKEX Group Head of Emerging Business and FIC, said the launch of Synapse would boost international participation in Mainland China’s equity markets. This technology-driven platform is expected to enhance post-trade efficiency and contribute to a stronger ecosystem, aligning with market and investor growth strategies.

Moreover, HKEX Synapse offers an optional service for institutional investors in Northbound Stock Connect, facilitating better management of post-trade operations across different time zones, particularly in compliance with the Mainland securities market’s T+0 settlement cycle.

This development is further strengthened by Synapse’s integration with The Depository Trust & Clearing Corporation (DTCC) through its Institutional Trade Processing (ITP) service. This integration streamlines cross-border transaction matching, generating and sending settlement instructions to Synapse via DTCC’s CTM service, enhancing the trade confirmation and settlement notification process.

Related Story: Paxos’ Blockchain Conducts The First-Ever, Same Day (“T+0”) Equity Settlement

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