The Hong Kong Stock Exchange’s Stock Connect system, which links Hong Kong’s stock markets with those in mainland China, is getting an upgrade thanks to blockchain technology.

According to a press release, the upgraded Stock Connect, dubbed Synapse, will incorporate smart contracts to help execute post-trade workflows and reduce settlement risk.

Synapse is able to simultaneously create settlement instructions for all parties along the settlement chain, facilitating concurrent processing, while also providing near-instantaneous status updates to all parties involved in the trade, a technical pamphlet explains, which is important when connecting traders in two different markets.

The average daily turnover of the Stock Connect totaled $15.302 billion (109.3 billion RMB) in the first half of 2023, up 5 percent from a year earlier, and a 50 percent increase from 2020 levels.

In Australia, the ASX has been advised to adopt blockchain technology to replace its settlement system called CHESS, the Australian Financial Review reported last year.

Synapse is scheduled to launch in Hong Kong on October 9.

Hong Kong Hong Kong Stock Exchange Blockchain

Sam Reynolds

Sam Reynolds is a senior reporter based in Taipei. Sam was part of the CoinDesk team that won the 2023 Gerald Loeb award in the breaking news category for coverage of FTX's collapse. Prior to CoinDesk, he was a reporter with Blockworks and a semiconductor analyst with IDC.