The Hong Kong Stock Exchange (HKEX) has entered into an agreement with the blockchain-startup Digital Asset to develop a blockchain-platform for processing trading results after completion of transactions, which will be used in the Northbound Stock Connect system. This is reported by CoinDesk.
In March, HKEX announced that it plans to follow the example of the Australian Stock Exchange (ASX), which previously shifted settlement operations to the blockchain-rails through a system developed by the Digital Asset startup. This technology is intended in part to replace the outdated clearing system CHESS by 2021.
The Northbound Stock Connect program was launched by HKEX in 2014. It allows foreign and Chinese investors to trade securities in each other’s markets using trading and clearing systems operated by exchanges from their countries.
According to the HKEX exchange, it, together with Digital Asset, has already completed work on a functional prototype of the system aimed at solving all these problems. The prototype allows a group of market participants to pre-set how the settlement operations will take place, and thus not experience difficulties due to the difference between time zones.
In addition, the test system allows real-time synchronization of the post-trading status of the transaction between asset managers, brokers, custodians and Hong Kong Securities Clearing Company Limited - the HKEX system for clearing settlements on operations with securities.
HKEX said it plans to begin a new phase of developing a platform that will involve a wider range of market participants.