HKEX Connects Hong Kong and Mainland China Markets with DAML
The Hong Kong Stock Exchange to introduce Synapse, a settlement acceleration platform for Northbound Stock Connect, in collaboration with Digital Asset and the DTCC.
As capital markets strive to create more efficiencies across post-trade processing, DAML smart contracts are emerging as the go to standard to automate the entire process.
Today’s process is cumbersome, dated and difficult to track. To start, asset managers must first decide how to allocate each trade across their funds, and that information needs to be matched with their broker and sent on to other service providers and exchange members such as custodians, clearing members and the exchange’s clearing house. Currently, this is done through bilateral communications across a variety of platforms. Each participant is required to check and enrich data about the trade, matching and reconciling it with their counterparties before instructing the next participant in the chain - eventually producing final settlement instructions to the exchange.
We are pleased to share that the Hong Kong Exchanges & Clearing Limited (HKEX) has announced its plans to launch HKEX Synapse, a new settlement acceleration platform for its landmark Stock Connect program. The new integrated platform, powered by DAML smart contracts, eliminates sequential processes and offers a single source of truth for the settlement of securities. It produces accurate and timely status updates. And, integration with DTCC’s Institutional Trade Processing services, such as CTM, now enables international investors to automate and expedite the settlement process.
Since its launch, institutional investors’ interest and participation in Northbound Stock Connect has grown significantly, especially following the inclusion of China’s A-shares in major global indices. As of 30 September 2020, Stock Connect’s Northbound average daily turnover in the first three quarters this year has more than doubled from the same period of 2019, to a record RMB 90 billion.
Mainland China’s tight settlement cycle has created the need for a more efficient settlement infrastructure, and HKEX Synapse will address this, helping investors to manage their portfolios and risks.
HKEX Synapse is an optional platform, and is expected to begin testing in 2021 with a group of pilot users, ahead of production deployment targeted for Q1 2022.
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