The Hong Kong Stock Exchange (HKEX) is tapping into the expertise of the Australian Securities Exchange (ASX) in implementing blockchain technology for core processes.
After two years of rigorous testing, the Australian Securities Exchange became the world’s first major exchange operator to turn to blockchain technology for its post-trade settlement process, a core feature, in December. The blockchain platform was developed by New York-based Digital Asset which sees the ASX as an investor and equity holder. It’s a notable first, given that the ASX also ranked as the world’s most profitable major stock exchange in 2017 with a profit margin of 77% ahead of the 71% margins posted by the Hong Kong Stock Exchange.
As it transpires, the HKEX is now looking to gain insights from the ASX on the decentralized technology to reduce its own costs and increase efficiency over a blockchain.
According to the Financial Times, HKEX chief executive Charles Li said on Tuesday that the bourse is keen on using blockchain technology in a number of areas including stock borrowing and lending as well as over-the-counter trade transactions.
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,” the executive told FT.
The HKEX had previously begun it is own blockchain development endeavor for smaller firms on the private market but a lack of viable software vendors and an aversion to in-house blockchain development kept the exchange operator from implementing the technology.
However, the HKEX is determined to now look at ways to implement blockchain technology, driven by the need to cut costs, Li said.
“[T]he exchange can come out and say let’s use this cheap technology to do something that doesn’t affect the central order book.