Hong Kong to launch Synapse platform in 2022 to ease settlement process for overseas investors trading Chinese shares via stock connects
- Synapse will standardise and streamline settlement workflows for international investors
- Carrie Lam could unveil some changes to the stock connect schemes during her policy address on Wednesday
Bourse operator Hong Kong Exchanges and Clearing (HKEX) will launch Synapse, a new settlement platform, in 2022 to help international investors settle mainland Chinese trades according to the country’s “tough” settlement requirements.
The platform will allow fund managers, stockbrokers, global and local custodians to interact with each other on an electronic network, so that they have to hire fewer people and incur lower costs to settle trades according to China’s settlement requirements.
Currently, international investors need to hire more people to settle trades involving mainland Chinese shares, as Beijing requires all stock trading to be settled within the same day of the transaction. This is called “T+0” and is tougher settlement cycle. Internationally, settlements can be made two days after a transaction, or T+2.
“The T+0 rule in China is a very tough requirement. Many international investors need to hire more people to meet the tight settlement time,” Glenda So, head of post trade at HKEX, said during an online media briefing on Tuesday. “Some international investors avoid investing in mainland markets due to this stringent settlement requirement.”
