Hong Kong Exchanges and Clearing Limited (HKEX) today unveiled its plans to launch HKEX Synapse, a new settlement acceleration platform for its Stock Connect program.

Using DAML smart contracts, HKEX Synapse will standardise and streamline the post-trade workflows of Northbound Stock Connect, maximising efficiencies for market participants in a transparent, secure and reliable manner. Asset managers, brokers, global custodians, local custodians, and clearing participants are poised to benefit from the improved connectivity and enhanced capacity to handle the growing volume of trades flowing through Stock Connect.

HKEX is partnering with The Depository Trust & Clearing Corporation (DTCC) to link HKEX Synapse to DTCC’s Institutional Trade Processing (ITP) services. With this integration, global investors and HKEX participants will be able to take advantage of the benefits of central matching of cross-border transactions on the Synapse platform, automating the trade confirmation and settlement notification process.

Digital Asset has been selected as the vendor to develop HKEX Synapse.

HKEX Synapse will help institutional investors participating in Northbound Stock Connect to better manage their post-trade operations across different time zones, in particular with regard to adhering to the Mainland securities market’s T+0 settlement cycle.

Mainland China’s tight settlement cycle has created the need for a more efficient settlement infrastructure, and HKEX Synapse will address this, helping investors to manage their portfolios and their risks.

By deploying DAML smart contracts, HKEX Synapse will be able to simultaneously create settlement instructions and provide status updates to all parties along the settlement chain, facilitating concurrent processing and greatly improving transparency for market participants.

HKEX Synapse is an optional platform, and is expected to begin testing in 2021 with a group of pilot users, ahead of production deployment targeted for the first quarter of 2022.

Upon launch, HKEX Synapse will extend Northbound Stock Connect’s global reach via DTCC’s ITP services, currently used by more than 6,000 clients across 52 markets globally, further realising the potential of Stock Connect for China’s A-share market.