HKEX Introduces Synapse for Faster Equity Settlement

The operator of The Stock Exchange of Hong Kong, Hong Kong Futures Exchange, and London Metal Exchange, Hong Kong Exchanges and Clearing Limited (HKEX), is launching a novel equity settlement acceleration platform on synapse.

The platform, named “Synapse,” will use smart contracts written in the DAML programming language to expedite post-trade flows and improve operational efficiencies, according to an announcement made on October 4.

Synapse will be implemented on Stock Connect, a HKEX channel that enables international investors to gain access to over a thousand Mainland Chinese securities via Hong Kong routing.

“The average daily turnover of Northbound Stock Connect was RMB109.3 billion in the first half of 2023, up 5% from the previous year and up 50% from levels in 2020,” developers wrote.

HKEX will be connected to Hong Kong’s Depository Trust & Clearing Corporation (DTCC) via its Institutional Trade Processing (ITP) service, enabling centralized matching of cross-border transactions.

The settlement instructions are then generated automatically and sent back to the Synapse platform, thereby improving the transaction confirmation workflow.

With the August introduction of retail trading on licensed cryptocurrency exchanges, Hong Kong has been rapidly transforming into a hub for Web3 companies with the tacit approval of China’s central government.

During this period, however, the largest Ponzi scheme in Hong Kong’s history occurred, with an estimated $166 million in user funds stolen by the JPEX cryptocurrency exchange. The investigation is still active.