Yesterday Hong Kong Exchanges and Clearing (HKEX) announced it will go live on Monday with HKEX Synapse, a smart contract driven platform. It helps with the post trade processes for Northbound Connect, which involves HKEX providing a conduit for foreign investors that trade stocks on the mainland Shanghai Stock Exchange. Synapse uses Digital Asset‘s DAML smart contract language.
Over the past four years, Northbound Connect has seen transaction growth of 870%. However, the current post trade processes are challenging because China settles transactions on the same day rather than the T+2 used in Hong Kong and in many other jurisdictions. With the different time zones, transactions settle during the night for Americans.
Additionally, most of the conventional post trade processes happen sequentially, meaning a delay by any party can hold up a transaction. In contrast, HKEX Synapse shares the data with all participants simultaneously – the ‘single source of truth’. Hence the clearinghouse, local and global custodians all see the same data. Synapse is integrated with DTCC infrastructure, including its central trade matching platform CTM.
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