The Hong Kong Stock Exchange (HKEX) is sourcing the expertise of the Australian Securities Exchange (ASX) to help in implementing its blockchain technology for the core stages and processes. After around two years of intensive testing, Australian Securities Exchange became the first exchange operator in the world to adopt blockchain technology. The exchange uses blockachain technology in its post-trade settlement process.
A New York-based Digital Asset developed the blockchain platform, which treats ASX as an equity holder and investor. This is an important step given the fact that ASX was ranked as the most profitable stock exchange in 2017 after recording a profit margin of 77% compared to the 71% that was recorded by the Hong Kong Stock Exchange.
As it stands, the HKEX is seeking to get insights from the ASX on how to apply the decentralized technology so as to cut on costs and increase its efficiency. As quoted by the Financial Times, Charles Li, the Chief Executive Officer of HKEX said that the exchange is very keen on applying the blockchain technology in several areas of operations. These include stock lending and borrowing and execution of over-the-counter trade transactions.
Hong Kong Stock Exchange is currently having negotiations with Australian Securities Exchange so as to benchmark on what they are doing plus sharing the required information. The HKEX had initially started plans to develop blockchain for small companies on the private market. It however lacked a viable software vendor which made it shelf the plan temporarily. The exchange was also committed with in-house blockchain development, which kept away from implementing the new technology.
The HKEX is however determined try all ways so as to implement and integrate the blockchain technology in its operations. The main driving force behind the adoption of this technology is cut on its operating costs.
To implement this plan, the HKEX has announced that it will launch a new venture referred to as the HKEX Private Market in 2018. This will provide small companies together with their investor a share transfer and registration platform which is based on blockchain technology. This will allow them carry out pre-IPO financing plus other activities.