Hong Kong Exchanges and Clearing Limited (HKEX) announced Tuesday that it will adjust its exchange-traded product (ETP) servicing capabilities with the introduction of a new digital platform.
HKEX to Digitise ETP Servicing
Scheduled for implementation in 2025, subject to regulatory approval and technical readiness, the web-based platform aims to streamline the in-kind creation and redemption process for relevant ETPs.
HKEX explains that by leveraging distributed ledger technology (DLT) and smart contracts, it intends to connect key ETP participants, enhancing operational efficiency and boosting overall market liquidity.
“Speed and efficiency are critical in an increasingly dynamic market environment,” said Jean-Francois Mesnard-Sense, HKEX’s Head of Exchange Traded Products. “With ETP being one of our fastest-growing products, HKEX is pleased to introduce this new digital enhancement. It will not only streamline operations for our market participants, but also drive more liquidity in the product ecosystem, supporting the vibrancy of our ETP marketplace and strengthening Hong Kong’s role as an international financial centre.”
This initiative aligns with HKEX’s broader strategy to enhance the attractiveness and competitiveness of its international ETP ecosystem. By replacing manual, paper-based processes with a digital solution, the exchange aims to simplify procedures and stimulate market activity.
HKEX has been actively supporting the growth of its ETP market in recent years. Key milestones include the introduction of the ICSD ETF settlement model in 2019, the implementation of a new spread table and continuous quoting market-making regime in 2020, and the inclusion of ETFs in Stock Connect in 2022.
The ETP market has seen significant growth in recent years, with average daily turnover reaching HK$17.9 billion in the first ten months of 2024. As of October 2024, there were 194 HKEX-listed ETPs and 26 issuers participating in the market.
