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After Australia, Hong Kong is Next: Sixth Largest Stock Exchange to Tap into Blockchain to Cut Costs and Enhance Efficiency

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The Financial Times is reporting that the Hong Kong Exchange and Clearing Market (HKEX) has initiated a dialogue with Australian Securities Exchange (ASX) to learn from its experience on the use of blockchain technology in the development of a settlement system.

After two years of thorough testing, the Australian Securities Exchange became the first major exchange platform to tap into blockchain technology for a settlement system, a core feature in December. Now, HKEX is now seeking to get insights from ASX on how it can use the decentralized technology to reduce its own costs and enhance efficiency with blockchain.

Talking to Financial Times, HKEX Chief Executive Officer, Charles Li, indicated that the exchange is keen on utilizing blockchain technology in different areas, including stock borrowing and lending and other over-the-counter trade transactions at lower costs, when compared with the conventional methods.

Cointelegraph quotes Li talking on the sidelines of the Credit Suisse Asian Investment Conference, saying that his officers have been entangled in a deep conversation with the Aussies to understand what they are doing and the benefits so far.

The executive told Cointelegraph,

The HKEX is currently in a much closer dialogue with the ASX to understand what they’re doing, and sharing information for sharing vendor relationships,

Building on Previous Developments

Previously, HKEX had started its own blockchain-based private market initiative to help finance smaller enterprises. Li, however, said that the technology vendors were not able to lend sufficient support, and HKEX is no longer interested in managing the effort in-house.

Li told the Financial Times,

Unfortunately this space changes so much that the vendors we chose… eventually evolved such that they’re not really useful to us, and we’re not interested in doing it ourselves,

Li is however optimistic that the current collaboration with ASX will bolster technological progress and vendor relationship, as has been the case with ASX. The CEO said that it’s time for the HKEX to come out and use this cheap technology which does not affect the central order book.

The latest move by HKEX follows other world bodies which have embraced blockchain technology to enhance their operations and cut costs. CCN reports that in February, the Canadian Securities Exchange, an alternative stock exchange that was started in 2004, announced its plans to launch an Ethereum-based securities and clearing platform, which will allow companies and startups to raise capital with security tokens. Similarly, earlier this year, the Kenyan government announced that it was exploring ways to use blockchain technology in land transactions and storage of land-related data and information.

What’s your take on the latest move by the Hong Kong Stock Exchange (HKEX) to use blockchain technology in its transactions? Is it time that different entities explored how they too can use the blockchain technology for improved results? Share your views with us in the comments section.

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