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HKEX Eyeing Blockchain and AI for An “ Efficiency Revolution”

The Hong Kong Exchanges and Clearing Limited (HKEX) is about to launch its three-year strategical plan for 2019-2021 early next year. Charles Li, Chief Executive Officer of HKEX said at the forum yesterday that the bourse will carry out comprehensive reforms in market regulation and business by adopting more cutting-edge technologies, including blockchain and artificial intelligence (AI).

The HKEX announced yesterday that the bourse has reached a consensus with China financial regulatory authorities to allow local investors in mainland China to trade securities of Hong Kong-listed companies with Weighted Voting Rights (WVR, also known as dual-class shares) by the middle of next year through Shanghai-Hong Kong Stock Connect or Shenzhen-Hong Kong Stock Connect.微信截图_20181211172150

Li commented that this initiative may have a positive impact on the development of WVR companies.

In addition, Li also indicated that the HKEX will carry out technological revolution. At present, many procedures in daily business still rely on manpower, with low efficiency and are very time-consuming. As thus, the bourse is aiming to expand the automation coverage.

For instance, the HKEX will work on blockchain adoption in the daily settlement process in northbound transactions, in order to enable international investors in different time zones to conduct liquidation in their business hours, without accommodating for Chinese time zone.

Li emphasized that blockchain is an advanced technology but may not be mature enough for large-scale adoption due to potential risks. As thus, the bourse decides to conduct a trial project of blockchain application in A-shares settlement proceeding in Shanghai, Shenzhen and Hong Kong Stock Connect.

In the meantime, the bourse also plans to build a data exchange to conduct data trading business. However, due to the particularity of the financial market, privacy is quite an important issue and some data still require confidentiality, this proposal is still at a preliminary stage.

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