Hong Kong Stock Exchange Wants A Bite Of Blockchain Technology

Wilfred Michael 

Wilfred Michael

Reporter

02 November 2018,
03:06
Hong Kong Stock Exchange Wants A Bite Of Blockchain Technology

The Hong Kong Stock Exchange (HKEX) have joined a list of traditional security exchanges globally who are working toward integrating blockchain technology.

According to a recent news report, HKEX has partnered with startup, Digital Asset in order to develop a blockchain-based platform that will support post-trade processing.

The exchange's CEO Charles Li confirmed this while speaking at Hong Kong Fintech Week 2018, but said the new solution will first be used for the HKEX Northbound Stock Connect program before being extended into the ‘broader market’.

It is hoped that integrating blockchain technology will massively improve trading experience and also attract more investors to the Hong-Kong operated exchange.

 

Cutting Down On Post-Trade Transaction Times With Blockchain

One of the biggest strengths possessed by Blockchain technology is the ability to securely facilitate multiple transactions by different parties within a short time.

It is this power that the exchange wants to tap into in order to make post trade processing as fast as possible.

Before now, time zone differences as well as a limited time to complete trade and settlement have been a barrier of investors who are using HKEX system to trade securities.

A prototype blockchain solution which Digital Asset have developed as a result of its partnership with HKEX will solve these challenges.

First, with the aid of smart contract, a group of market participants will be able to predetermine which settlement workflows suits their demands, thus removing the barrier of time zone difference.

Ultimately, the platform will provide real-time synchronization for everyone involved in the post-trade processing cycle including asset managers, brokers, custodians and the HKEX's securities clearing house.

 

Following The Trend

By getting involved with blockchain technology at this stage, the Hong Kong stock exchange has followed the steps of stock exchanges in Singapore, India and Australia who are already embracing the cutting-edge invention.

Given it's huge potential, many traditional asset exchanges are expected to delve into blockchain in the not so distant future.