08 Oct, 2023

HKEX Introduces Synapse: A Smart Contract Powered Settlement System

Susan Oh
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Susan Oh
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Susan Oh is a leading figure in the integration of AI and blockchain for social good, serving as the CMO for BeOmni by Beyond Imagination and a civic technologist dedicated to creating scalable solutions. She is a board member of the Blockchain Commission For Sustainable Development supported by the UN GA Office of Partnerships, and...
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HKEX Introduces Synapse

TL;DR

  • Hong Kong Exchanges and Clearing Limited is unveiling an HKEX Synapse, a settlement platform rooted in DAML technology.
  • Its goal is to enhance post-trade processes by improving transparency and efficiency.

Hong Kong Exchanges and Clearing Limited Is Launching Synapse

Hong Kong Exchanges and Clearing Limited unveiled an innovative equities settlement acceleration system called “Synapse.” 

The Hong Kong Exchanges and Clearing Limited oversees The Stock Exchange of Hong Kong, the Hong Kong Futures Exchange, and the London Metal Exchange.

Hong Kong Exchanges and Clearing Limited Is Launching Synapse
Hong Kong Exchanges and Clearing Limited Is Launching Synapse | Source: HKEX Group

As per the announcement on Oct. 4, this system harnesses the capabilities of smart contracts, written in the DAML programming language, to optimize post-trade processes and boost overall operational efficiency.

Set to be integrated with Stock Connect, an HKEX conduit, Synapse offers global investors a gateway to over 1,000 mainland Chinese stocks via Hong Kong. 

In the initial half of 2023, the average daily volume of Northbound Stock Connect surged to RMB109.3 billion — a 5% annual rise and a significant 50% growth since 2020.”

HKEX Announcement

Furthermore, HKEX will collaborate with Hong Kong’s Depository Trust and Clearing Corporation using its Institutional Trade Processing service. 

This integration facilitates centralized matching of international transactions, with settlement directions auto-generated and relayed to the Synapse system, refining the trade confirmation process.

With the implicit approval of China’s central authorities, Hong Kong is swiftly establishing itself as a prime destination for Web3 companies. 

This momentum was evident when licensed cryptocurrency exchanges began offering retail trading in August. 

Yet, it’s important to note that the city witnessed its most significant Ponzi scheme, where the JPEX crypto exchange allegedly defrauded users of an estimated $166M. The probe into this matter continues.

Hong Kong’s Emergence as a Web3 Powerhouse

Recently, Hong Kong has carved out a niche as a global crypto epicenter.

Fueled by a burgeoning entrepreneurial scene and favorable regulatory frameworks, the city is on a fast track to becoming the premier crypto capital globally.

Hong Kong's Emergence as a Web3 Powerhouse
Hong Kong’s Emergence as a Web3 Powerhouse | Source: Reuters

Historic crypto giants such as BitMEX and Alameda Research have their roots in Hong Kong.

Emerging insights indicate that, in synergy with China, Hong Kong aspires to be at the forefront of new crypto innovations.

In August, HashKey Exchange and OSL got crypto trading licenses, so now they can serve individual crypto traders.

Next, a few crypto funds started to help lift new companies.

Moreover, these funds aim to put money into different things like blockchain structures and apps for customers in gaming and NFTs. They also invest in financial services like exchanges, lending platforms, and wallets.

One of these examples is The Titan Fund, the crypto investment fund we covered in our previous article. 

The Titan Fund successfully wrapped up its initial funding phase on October 4, drawing backing from 30 investors. 

So, what do you think? Could Hong Kong be the inaugural city to fully embrace cryptocurrency?