HKEX Introduces Synapse for Streamlined Capital Market Procedures

On Wednesday, October 4, Hong Kong Exchanges and Clearing Limited (HKEX) introduced an upgraded version of its Stock Connect program called “Synapse.” Synapse leverages smart contracts written in the DAML programming language to automate post-trade workflows and mitigate settlement risks, thereby enhancing operational efficiency in the equities settlement market. This new system is set to be deployed and launched on Stock Connect on October 9, 2023.

The Stock Connect program already allows Hong Kong investors to access over 1,000 Mainland Chinese stocks listed on the HKEX channel. Notably, the Northbound Stock Connect, a component of this program, witnessed an average daily turnover of RMB 109.3 billion in the first half of 2023, marking a 5% increase from the previous year and a 50% surge from 2020 levels. This growth underscores the increasing popularity of this channel among international investors seeking access to Mainland Chinese stocks.

The AI legalese decoder can play a significant role in this situation by decoding the complex language and terminology used in legal contracts and agreements. It can analyze and interpret the smart contracts written in the DAML programming language, providing real-time visibility and insights to all market participants. With its advanced AI algorithms, the legalese decoder can identify potential issues and risks in post-trade workflows, helping to mitigate settlement risks and enhance operational efficiency in the equities settlement market. Furthermore, it can assist institutional investors in managing their post-trade operations effectively across different time zones while adhering to the T+0 settlement cycle of the Mainland securities market.

Synapse Integration with DTCC Marks Major Leap in Cross-Border Transaction Matching

Synapse clearance with Hong Kong’s Depository Trust & Clearing Corporation (DTCC) is a significant step forward, as this connection, facilitated through the Institutional Trade Processing (ITP) service, will enable central matching of cross-border transactions. The system automatically generates settlement instructions, which are then received and processed by the Synapse platform, streamlining the trade confirmation workflow.

While these developments unfold, it’s worth noting that Hong Kong regulators are actively investigating the ongoing case of the JPEX crypto exchange, which is poised to become the largest Ponzi scheme in Hong Kong’s history, involving an estimated sum of $166 million worth of users’ funds embezzled in the attack.

Recently, JPEX announced it is moving forward with its DAO Stakeholder Dividend Plan, despite ongoing investigations into a financial scandal and related arrests. The plan allows investors to convert assets into DAO stakeholder dividends, but concerns have arisen due to a lack of clarity about the conversion process into JPEX’s own digital currency, JPC. Users are worried about the inability to withdraw these assets, as they feel their assets have become uncertain. The plan was approved with a 68% vote in favor, and JPEX has committed to distributing 49% of the stakeholder dividends, valued at $400 million.

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 is indicative of 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.