The Hong Kong Exchanges and Clearing Limited (HKEX) joyously unveiled HKEX Synapse – a pioneering settlement acceleration platform to redefine market operations. This groundbreaking initiative is set to go live on 9 October 2023, marking a significant milestone in the illustrious journey of Stock Connect, a distinguished mutual market access program bridging the Mainland Chinese markets with the vibrant Hong Kong market landscape.
Innovations Galore: Introducing Synapse
HKEX Synapse emerges as a beacon of innovation, leveraging cutting-edge technology to propel market efficiency and transparency to unprecedented heights. This isn’t merely a technical upgrade; it’s a giant leap towards standardizing and streamlining post-trade workflows through the robust framework of DAML smart contracts. The reward? A significant reduction in settlement risks while enhancing operational efficiencies and transparency in one smooth stride.
Synapse is not a solitary endeavor but a testament to HKEX’s unwavering dedication to continuously augmenting Stock Connect. This unique channel has become synonymous with efficient, accessible, and cost-effective pathways for investors diving into the capital market waters of Mainland China and Hong Kong. The fresh addition of up to 10 extra trading days yearly and including over 1,000 newly listed Mainland China stocks via Northbound Stock Connect are other recent feathers in Stock Connect’s cap.
The Synapse Advantage: Real-Time Market Insights
Synapse obliterates sequential processes and offers a real-time panoramic view of the settlement process. This revelation benefits a broad spectrum of market players, including asset managers, brokers, custodians, and clearing participants. The boon of real-time data synchronization coupled with enhanced scalability allows them to adeptly manage the burgeoning volume of trades via Northbound Stock Connect. The soaring average daily turnover, which touched RMB109.3 billion in 2023’s first half, underpins the growing market enthusiasm.
HKEX Group’s Head of Emerging Business and FIC, Glenda So, radiates optimism as she shares, “HKEX Synapse is not just a platform; it’s a monumental enhancement to our Stock Connect infrastructure. It’s the bedrock for international investors eyeing the next growth phase in Mainland China’s equity markets. This technologically empowered platform is a ladder to superior post-trade efficiencies, a precursor to a robust market and investor growth ecosystem.”
Synapse and The Global Connect: Bridging Borders
HKEX Synapse isn’t an island but a bridge connecting global investors by integrating with The Depository Trust & Clearing Corporation (DTCC) via its Institutional Trade Processing (ITP) service. This liaison facilitates the central matching of cross-border transactions through DTCC’s CTM service, an automated conduit for generating and transmitting settlement instructions to the Synapse platform. This simplifies the trade confirmation and settlement notification procedure.
Offered as an optional service, Synapse is a boon for institutional investors participating in Northbound Stock Connect, especially while navigating the Mainland securities market’s T+0 settlement cycle across diverse time zones. It’s more than a platform. It promises a streamlined, transparent, and efficient market operation ready to welcome the future.
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