Hong Kong Stock Exchange and Digital Asset Partner to Create New Blockchain Trade Platform
The Hong Kong Stock Exchange (HKEX) has recently teamed up with Digital Asset, a blockchain startup company, to develop a new platform that will be used in post-trade processing. Both companies will be exploring the development of a new blockchain platform which will be powered by the Northbound Stock Connect Program.
The Hong Kong Stock Exchange has decided to follow the Australian Securities Exchange to use the blockchain to track the settlement transactions made on the platform. The idea is to use this to replace the current system that is being used by the company until 2021.
The Northbound Stock Connect system was launed in 2014 and it was used to allow international and mainland Chinese investors to trade securities betwen them without needing clearing from their own exchanges. The new system would be made on top of it and would make this technology more developed.
As the clients that use the Northbound Stock Connect system right now are constrained by some issues like the slow speed of the process and time zone differences, this project is considerably important for the development of the industry in Hong Kong.
At the moment, the Hong Kong Stock Exchange affirms that it has already been using a prototype that is functional and can be operational. The prototype, the HKEX believes that can be used to improve its current business in many ways while the final version does not come out. One way is the synchronization of post-trade statuses between managers, brokers and custodians, for instance.
As the HKEX is planning to engage with global markets and to expand its business, it can be very important to use the services to get a more seamless experience.
Some other exchanges in many countries including Singapore and India are also eyeing this technology and thinking about novel ways of using it. The Frankfurt Stock Exchange, for instance, is already making blockchain trials.