Hong Kong Exchanges and Clearing Limited Introduces “Synapse” for Streamlined Capital Market Procedures
Hong Kong Exchanges and Clearing Limited (HKEX) has launched an upgraded version of its Stock Connect program called “Synapse.” Synapse utilizes smart contracts written in the DAML programming language to automate post-trade workflows and reduce settlement risks, improving operational efficiency in the equities settlement market. The system will be deployed on October 9, 2023, and aims to enhance real-time visibility and insights for all market participants.
The Northbound Stock Connect, a component of the Stock Connect program, experienced a 5% increase in average daily turnover in the first half of 2023 compared to the previous year. This growth highlights the growing popularity of this channel among international investors seeking access to Mainland Chinese stocks.
Improved Efficiency for Northbound Stock Connect Participants
Synapse offers significant benefits to Northbound Stock Connect participants by providing real-time data synchronization and enhanced scalability to accommodate rising trade volumes. It enables institutional investors to efficiently manage their post-trade operations across different time zones while adhering to the T+0 settlement cycle of the Mainland securities market.
HKEX is committed to continuously enhancing Stock Connect as an efficient and cost-effective channel for investors in both mainland China and Hong Kong capital markets. Recent upgrades include additional trading days, incorporation of over 1,000 additional stocks listed in Mainland China, and the introduction of Synapse.
Synapse Integration with DTCC for Cross-Border Transaction Matching
The integration of Synapse with Hong Kong’s Depository Trust & Clearing Corporation (DTCC) marks a major leap in cross-border transaction matching. This connection enables central matching of cross-border transactions through the Institutional Trade Processing (ITP) service. The Synapse platform streamlines the trade confirmation workflow by automatically generating settlement instructions received and processed by the system.
While these developments unfold, Hong Kong regulators are actively investigating the JPEX crypto exchange case, which involves a significant financial scandal. Despite ongoing investigations, JPEX is moving forward with its DAO Stakeholder Dividend Plan. However, concerns have arisen due to a lack of clarity about the conversion process into JPEX’s own digital currency, JPC.
Hong Kong’s Transformation into a Crypto Hub
Hong Kong has made significant strides in becoming a prominent crypto hub. Recent initiatives like Synapse showcase the city’s rapid transformation and position it as a dynamic player in the global crypto landscape.
Hot Take: Hong Kong Exchanges and Clearing Limited Enhances Stock Connect with Synapse
The introduction of Synapse by Hong Kong Exchanges and Clearing Limited (HKEX) represents a significant enhancement to the Stock Connect program. By leveraging smart contracts and automation, Synapse streamlines capital market procedures and improves operational efficiency in the equities settlement market. With real-time visibility and scalability, this upgrade benefits Northbound Stock Connect participants, allowing them to manage post-trade operations seamlessly. Integration with DTCC further enhances cross-border transaction matching capabilities. These developments, coupled with Hong Kong’s growing reputation as a crypto hub, demonstrate its commitment to innovation in the financial sector.
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