The Stock Exchange of Hong Kong considers using blockchain for its next-generation transaction settlement system. The platform upgrade may take three to four years.

The SEHK chief executive Charles Li revealed the company’s interest in the distributed ledger technology during a media lunch on Friday. According to him, the exchange is looking to modernise its trading infrastructure as well as its post-trade system. The company has created a road map for the modernisation programme that may take 3-4 years. The upgrade aims to cut expenses and reduce operational risks, CoinDesk reports.

The blockchain technology is one of the elements SEHK will consider to use for optimisation of its trading and post-trade processes.

“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,” Li said.

According to the South China Morning Post, SEHK has been in consultation with the New York-based Nasdaq exchange operator concerning the blockchain technology since October last year.

In September 2016, the Hong Kong Monetary Authority announced its plan to launch an innovation hub that would test distributed ledger solutions. The Hong Kong Applied Science and Technology Research Institute joined the initiative.

Besides the Honk Kong Stock Exchange, a dozen of other world trading platforms has shown an interest in blockchain, including the Australian Securities Exchange (ASX), South Korean Stock Exchange, London Stock Exchange, Japan Exchange Group and Nasdaq. In particular, ASX believes that the need for the clearing system may largely disappear with the implementation of blockchain.

Elena Platonova