HKEX Introduces Synapse: A Streamlined Capital Market Solution
On October 4, Hong Kong Exchanges and Clearing Limited (HKEX) announced the launch of an upgraded version of its Stock Connect program called „Synapse“. This new platform aims to enhance operational efficiency in the equities settlement market by leveraging smart contracts written in the DAML programming language to automate post-trade workflows and mitigate settlement risks.
Increased Popularity of Stock Connect
The Stock Connect program, available to Hong Kong investors, provides access to over 1,000 Mainland Chinese stocks listed on the HKEX channel. The program’s Northbound Stock Connect component reported a 5% increase in average daily turnover to RMB 109.3 billion in the first half of 2023. This surge represents a 50% growth from the previous year and underscores the program’s rising popularity among international investors seeking access to Mainland Chinese stocks.
Synapse: Streamlining Capital Market Procedures
HKEX Synapse represents a major enhancement for Northbound Stock Connect participants, offering real-time visibility, insights, and scalability. One of its key features is real-time data synchronization, which allows market participants to streamline their post-trade operations efficiently. Glenda So, HKEX Group Head of Emerging Business and FIC, stated that Synapse will support the next phase of growth for international participation in Mainland China’s equity markets.
Enhanced Support for Institutional Investors
Synapse also extends support to institutional investors using Northbound Stock Connect, enabling them to manage their post-trade operations across different time zones. Significantly, this support is maintained while adhering to the T+0 settlement cycle of the Mainland securities market. HKEX’s commitment to enhancing Stock Connect ensures that it remains an efficient, accessible, and cost-effective channel for investors in both the mainland Chinese and Hong Kong capital markets. Recent enhancements include the addition of up to 10 extra trading days per year, the inclusion of over 1,000 additional stocks listed in Mainland China, and the introduction of Synapse as a new settlement platform.
Integration with DTCC for Cross-Border Transaction Matching
An essential progression for Synapse is its clearance and integration with Hong Kong’s Depository Trust & Clearing Corporation (DTCC). This connection, facilitated through the Institutional Trade Processing (ITP) service, allows for central matching of cross-border transactions. The platform automatically generates settlement instructions, which are then received and processed by Synapse, thereby streamlining the trade confirmation workflow.
Hong Kong’s Crypto Landscape and JPEX Investigation
While HKEX continues to provide innovative solutions for capital market participants, Hong Kong regulators are actively investigating the case of the JPEX crypto exchange. The exchange is involved in what is poised to be the largest Ponzi scheme in Hong Kong’s history, with an estimated sum of $166 million worth of users‘ funds embezzled in the attack.
Despite ongoing investigations and related arrests, JPEX has announced the implementation of its DAO Stakeholder Dividend Plan. This plan enables investors to convert assets into DAO stakeholder dividends but has raised concerns regarding the lack of clarity surrounding the conversion process into JPEX’s own digital currency, JPC. Users are worried about the uncertainty surrounding the withdrawal of these assets. Approved by a 68% vote in favor, JPEX has committed to distributing 49% of the stakeholder dividends, valued at $400 million.
Hong Kong’s Transformation into a Prominent Crypto Hub
In August, Hong Kong’s regulatory authority took a significant step by legalizing retail trading on licensed crypto exchanges. The recent unveiling of Synapse and other initiatives illustrate Hong Kong’s rapid transformation into a prominent crypto hub. These efforts position the city as a dynamic and forward-looking player in the global crypto landscape.
