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Hong Kong Stock Exchange Unveils Settlement Platform Utilizing Blockchain Technology

Hong Kong

The Hong Kong Stock Exchange is enhancing its Stock Connect system, which serves as a vital link between Hong Kong’s and mainland China’s stock markets, through the integration of blockchain technology. The upgraded platform, named Synapse, will leverage smart contracts to streamline post-trade processes and mitigate settlement risks. This innovation allows Synapse to generate settlement instructions concurrently across the entire chain, ensuring seamless processing. Additionally, it offers real-time status updates to all parties involved in a trade, especially crucial when connecting traders from disparate markets.

Notably, the Stock Connect witnessed a notable surge in its average daily turnover, amounting to $15.302 billion (109.3 billion RMB) in the first half of 2023. This marks a 5 percent increase from the previous year and a remarkable 50 percent surge from 2020 levels. This growth underscores the system’s significance in facilitating cross-border trading activities.

Meanwhile, in Australia, the Australian Securities Exchange (ASX) has received recommendations to adopt blockchain technology as a replacement for its settlement system, CHESS. This move towards blockchain-based settlement solutions aligns with global trends in modernizing financial infrastructures for greater efficiency and security, as reported by the Australian Financial Review last year.

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