Hong Kong exchange considers adopting robotics, artificial intelligence to enhance efficiency, eyes data trading

Bourse operator Hong Kong Exchanges and Clearing said on Monday it was looking into using robotics and artificial intelligence at the Hong Kong stock exchange, Asia’s third-largest stock market.

According to its chief executive, Charles Li Xiaojia, HKEX is planning a comprehensive revamp of its business and operations to embrace the new economy. Li did not give an exact timeline, but the exchange is expected to announce a three-year strategy for 2019-21 early next year.

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“The current stock exchange procedures are still largely dependent on manpower, and are not automated enough. Efficiency is very low,” Li told an economic forum in Hong Kong.

He said the exchange had set up an innovation lab this year to study the adoption of robotics, AI and other new technology, with the aim of enhancing efficiency and tackling other trading and settlement issues. A person familiar with the innovation lab’s work said it was looking at the use of AI to scan documents and generate insights, on which the exchange could take action.

HKEX is also looking into turning big data into a tradeable asset class in the long term. Li said: “China is now a country with a lot of big data, which could be a valuable asset if AI technologies are used to manage it.” He added that this would require studies about security and privacy before any data exchange product could be launched.

“The idea of trading big data is still in the early stages of a study, and even overseas exchanges do not have much experience for us to share,” said Li. He added that blockchain technology could be used to improve the stock connects between Hong Kong and Shanghai and Shenzhen.

Gary Cheung Wai-kwok, the chairman of industry body Hong Kong Securities Association, said the adoption of technology by the exchange was a move in the right direction.

“While many overseas markets have adopted paperless shares certificates, Hong Kong still has paper shares certificates. The government will consult the market in January about a paperless market in Hong Kong, which will improve efficiency,” said Cheung.

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“The process of an initial public offering is another major area where HKEX should adopt more new technology. At present, listing candidates need to publish a physical listing prospectus, which is several hundred pages for every IPO.

“The IPO application process also involves a lot of physical forms for investors to fill. These should go digital so as to save paper and enhance efficiency,” said Cheung.