The Hong Kong Stock Exchange’s Stock Connect system, which links Hong Kong’s stock markets with those in mainland China, is getting an upgrade thanks to blockchain technology.
According to a press release, the upgraded Stock Connect, dubbed Synapse, will incorporate smart contracts to help execute post-trade workflows and reduce settlement risk.
Synapse is able to simultaneously create settlement instructions for all parties along the settlement chain, facilitating concurrent processing, while also providing near-instantaneous status updates to all parties involved in the trade, a technical pamphlet explains, which is important when connecting traders in two different markets.
The average daily turnover of the Stock Connect totaled $15.302 billion (109.3 billion RMB) in the first half of 2023, up 5 percent from a year earlier, and a 50 percent increase from 2020 levels.
In Australia, the ASX has been advised to adopt blockchain technology to replace its settlement system called CHESS, the Australian Financial Review reported last year.
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Synapse is scheduled to launch in Hong Kong on October 9.