HKEX Introduces Synapse: A New Settlement Acceleration Platform for Stock Connect
Hong Kong Exchanges and Clearing Limited (HKEX) announces the launch of HKEX Synapse, a settlement acceleration platform designed to improve market efficiency and transparency for Northbound Stock Connect participants. The platform, set to launch on October 9, 2023, will employ DAML smart contracts to streamline post-trade operations. The move aims to enhance real-time data synchronization and scalability for asset managers, brokers, and other market participants.
Stock Connect is a mutual market access programme that connects Mainland Chinese markets with Hong Kong markets. The most recent addition to Stock Connect is called HKEX Synapse. The platform intends to standardise and simplify post-trade operations, with the end goal of lowering settlement risks and improving operational efficiency. Institutional investors, especially those whose operations span many time zones, will be able to make use of it as an optional service when it becomes available.
The HKEX reports that the average daily turnover of Northbound Stock Connect reached RMB109.3 billion in the first half of 2023. This is a 5% increase from the previous year as well as a 50% increase over the levels seen in 2020. It is anticipated that HKEX Synapse would be able to manage this ever-increasing volume effectively by providing all market participants with real-time visibility and insights into the settlement process.
Integration will take place between HKEX Synapse and The Depository Trust & Clearing Corporation (DTCC) through the latter's Institutional Trade Processing (ITP) service. This will make it possible to centralise the matching of international transactions by using the CTM service offered by DTCC. This service will then automatically produce and transmit settlement instructions to the Synapse platform.
The introduction of HKEX Synapse comes at a time when Hong Kong is working to further establish itself as a centre for Web3 companies. However, it is important to point out that the city has also been the location of serious financial scandals, including a Ponzi scam involving the JPEX crypto exchange, which is currently being investigated. This is something that should be taken into consideration.
"This technology-enabled 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," commented Glenda So, Head of Emerging Business and FIC for the HKEX Group.
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