Hong Kong Stock Exchange Announces Plan For 2018 Blockchain Launch

The Hong Kong Stock Exchange has announced it intends to launch a blockchain-powered market in 2018, in one of the first moves of its kind at this scale.

The private market will be driven by blockchain technology, and will be designed to enable smaller businesses to access capital and raise finance.

The launch was detailed in a briefing note published on Tuesday, and the system currently in development is expected to go live at some point in 2018.

The announcement came in response to questions raised over whether Hong Kong was adequately positioned to leverage new technologies and expertise, as blockchain is set to play an increasingly important role in the near future.

The blockchain market is being developed and promoted by a new entity, HKEX Private Market, and while no firm timeframe has been made public, it is expected to be operational over the course of the next 12 months.

Hong Kong Stock Exchange Chief Executive Charles Li said the system would help smaller businesses before they are ready to list on the main markets, and as such, it would play a critical role in fostering business growth.

"The Private Market will serve as a 'nursery' for early stage companies before they are ready to enter public markets. They can conduct pre-IPO financing and other activities on an off-exchange venue not under the regulatory remit of the Securities and Futures Ordinance."

The news has been welcomed by stakeholders in Hong Kong and beyond, recognising the potential of a blockchain platform to assist in powering non-mainstream capital markets.

While the development is one of the Hong Kong Stock Exchange’s most prominent deployments of blockchain technology to date, it is not the first time the organisation has expressed an interest in the technology.

Charles Li has previously suggested that blockchain technology could be used to power exchanges, and he has been said to be keen on the idea of ultimately taking the main Hong Kong exchanges onstream with blockchain.

Allowing for faster transaction times, immutable, secure data, and significantly lower administrative costs, it is seen by many as a promising technology for the future of capital markets.