Date
22 April 2019
HKEx chief executive Charles Li  plans to introduce a full-scale reform of market rules and business development to embrace the new economy. Photo: HKEJ
HKEx chief executive Charles Li plans to introduce a full-scale reform of market rules and business development to embrace the new economy. Photo: HKEJ

HKEx eyes world’s first digital asset exchange

The Hong Kong Exchanges and Clearing Limited (HKEx) is exploring the feasibility of establishing the world’s first digital asset exchange, as the bourse’s chief executive Charles Li Xiaojia revealed at the latest HKEJ Economic Summit. 

Li indicated that the exchange will unveil the strategic plan in early 2019, and introduce a full-scale reform of market rules and business development to embrace the new economy. 

He stressed the importance of introducing innovative technology, not only for boosting trade efficiency and saving costs, but also for opening new businesses. 

The exchange has already set up an innovation lab to study how to improve operations through a higher level of automation.

Also, the exchange is exploring the development of a blockchain-powered platform for HKEX’s northbound Stock Connect program in order to facilitate the settlement processing.

However, Li admitted that the market may not have the confidence to fully embrace blockchain technology at the beginning, which is why it is better to launch a trial program first. 

HKEx is planning to set up a digital asset exchange and open the trading of digital assets. Massive amounts of data can become valuable resources after being processed through artificial intelligence and generate new tradable assets and trade models, Li said. 

Big data is now seen as the new oil in the global tech world. It is set to become the most valuable and powerful resource in the next century. 

However, the production, processing, standardization, application and trading of such resources are still in their early stages. Still, the Hong Kong exchange wants to tap into the massive opportunities in this market segment. 

The Institute of Big Data Governance was formally established last week. A number of industry players and organizations have joined the institute including Alibaba, Tencent, Bank of China, Cyberport, Hong Kong Science and Technology Parks Corp., Google, Amazon Web Services, and Microsoft. 

Hong Kong has a unique advantage in the big data industry. For example, Beijing requires foreign internet firms to put their servers handling Chinese users’ data within China. That makes Hong Kong a natural choice as international companies feel more comfortable in the city because of its legal system, professional manpower and regulatory infrastructure. 

In the long run, if Hong Kong can leverage on its role as a proxy to mainland China, and develop international standards in big data transaction and governance, it could establish itself as a global data hub. And the digital assets exchange will play a key role in achieving that goal. 

This article appeared in the Hong Kong Economic Journal on Dec 12 

Translation by Julie Zhu 

[Chinese version 中文版

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RT/CG

Hong Kong Economic Journal columnist

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