The Stock Exchange of Hong Kong (SEHK), Asia’s third largest stock exchange in terms of market cap, has plans to upgrade its market infrastructure, possibly with the blockchain. As the blockchain becomes a technology of interest for many industries in different countries, Hong Kong is also exploring its capabilities to advance its stock exchange infrastructures. Chief Executive of Hong Kong Exchanges and Clearing Limited (HKEX) Charles Li, recently highlighted these plans at the HKEX 2017 Annual Media Luncheon.
“Our Next Generation Clearing initiative is more than a refresh of existing technology. We aim to make significant enhancement in technology, risk models and business processes in this upgrade.”
In 2016 we started to look at the role new technologies (such as cloud computing and distributed ledger) can play in our future development and this will continue in 2017 when we will determine our NextGen roadmap.”
Blockchain Advances in Hong Kong
China is one of the largest centers of activity for blockchain research and development, especially within the fintech industry. In September 2016, Hong Kong’s currency board and de facto central bank, the Hong Kong Monetary Authority (HKMA), announced that their Fintech Facilitation Office would be collaborating with the Hong Kong Applied Science and Technology Research Institute to create the Fintech Innovation Hub (The Hub) to support research and development in the fintech sector. The Hub is an expandable segregated network of 200 virtual workstations with multiple hybrid cloud computing configurations that will emulate, compare, and analyze diverse financial services to create various fintech solutions.
The Hub can also connect with up to 30 external innovation facilities and developer laboratories worldwide to function as a neutral ground for industry professionals to conduct Proof-of-Concept trials, and research the blockchain. Howard Lee, Senior Executive Director of the HKMA, described the uses of the Hub, including for blockchain experiments:
“Trials of fintech solutions and proof of concept works which require a certain degree of interoperability or interconnectedness among multiple banks, SVF licensees or other parties can take place at the Hub before they are tested out at stakeholders’ production environment and subsequently launched in the market. Examples include fintech solutions that try to utilise the blockchain or distributed ledger technology in supporting cross-banks financial services.”
From a panel on financial affairs of the Legislative Council of Hong Kong:
“According to the Steering Group on Financial Technologies, Hong Kong has the potential to become a key blockchain hub through leveraging its high concentration of industry domain experts and institutions in finance, logistics, and other professional services.”
Although Hong Kong is an autonomous territory of China, it still serves as a key investment and financial hub for the country, and its history of influence on financial reform could lead to the next generation of fintech innovation for China and the rest of Asia.
Other Blockchain Advances in China
Last year, Blockapps, an enterprise platform developer specializing in Ethereum technology, collaborated with China-based venture capital firm, Fenbushi Capital, to introduce the Blockchain-as-a-Service (BaaS) platform, BlockApps STRATO, a platform to quickly build, scale, and deploy blockchain applications.
In 2016, ChinaLedger, a distributed ledger technology coalition led by Wanxiang Blockchain Labs, announced that it was working alongside the Securities Association of China (SAC) to establish industry standards for using the blockchain. Vitalik Buterin, the founder of Ethereum, sits on the Internet Securities Commission of the SAC and is an advisor for ChinaLedger.
In January 2017, an announcement was made at the World Economic Forum in Davos that Credit China Fintech would be one of the 25 founding members of the Global Blockchain Business Council, which seeks to “bring together the world’s leading business leaders and international government institutions to highlight the latest innovations and advances in Blockchain technology.”