Hong Kong Exchanges and Clearing (HKEX) to revolutionize international settlement of securities with a platform powered by smart contracts


Hong Kong Exchanges and Clearing (HKEX) leveraged DAML, an open-source smart contract language to develop a cutting-edge securities settlement platform. This platform, called Synapse, aims to seamlessly connect Hong Kong’s growing financial market with mainland China.

What problem does this market encounter?

The Hong Kong Exchanges and Clearing (HKEX) used Stock Connect, a platform that revolutionized how international investors and mainland chinese investors access each other’s equity market, with Hong Kong serving as a connector.

As a result, there has been a surge of interest from investors in Northbound trades with a daily turnover that increased by over 870% over the last fours years. However, operations in this market are not always simple, especially for international investors. Indeed, Hong Kong and China’s settlement cycles are different, which creates challenges for US and European investors due to different time zones.

For instance, investors in Asia only have four hours to complete a settlement. US and European investors must work at night to support the settlement with the Hong Kong Stock Exchange. In addition to these time zone constraints, the traditional approach to trade processes and workflows is sequential and opaque. As a consequence, this leads to increased costs, time pressure and higher likelihood of errors.

What is the solution?

In order to solve these challenges, a single source of truth platform for settlement was needed. That is the reason why the HKEX created ‘Synapse’: an integrated solution with the objective to improve post-trade efficiencies for Northbound Stock Connect participants.

Through the use of DAML, HKEX’s Synapse confronts the different challenges by streamlining the settlement process and offering a solution to the time zone complexities faced by European and US investors. The platform eliminates sequential bottlenecks, ensuring timely and accurate updates on settlements.

Image source: HKEX’s website

The outcome of this initiative is significant. Synapse will enable market participants to have enhanced access to investment opportunities, streamline operations, and scale their activities efficiently. Furthermore, HKEX integrated with DTCC’s Institutional Trade Processing services to enable international investors to automate and expedite the settlement process. This will allow Synpase to extend its global reach and tap into a network used by over 6,000 clients across 52 market.

On October 9, 2023 the platform was officially launched.

Benefits & Outcomes
  • Enables to standardize workflows and reduce complexity
  • Provides a single source of truth platform
  • More integrated, transparent and efficient solution for the challenges of securities settlement
  •  The platform provides instant status updates, which significantly improves the management of exceptions and reduces operational risks and foster transparency
Further Info

HKEX Chief Executive, Charles Li said: “Embracing new technology to further develop our markets is a cornerstone of our strategy and we are delighted to work together with DTCC and Digital Asset on this exciting new enhancement to our landmark mutual access programme with Mainland China.”

In summary, HKEX’s Stock Connect platform faced a number of challenges such as:

  • Tight settlement window, a problem for international investors
  • Lack of automation which can lead to more errors
  • Lack of transparency which make processes more complicated

All of this lead to manual processes and lack of standardization which hinder scalability and become a barrier to participation

HKEX’s new platform, Synapse, built with DAML smart contract language allows for:

  • More efficient integrations thanks to DAML technology
  • Standardize settlement workflows which improves operational efficiency and reduces risks
  • Provides more transparency in the workflows



Project is live.

Research by Alexandre on November 2023.

© Antony Welfare 2024