Hong Kong Exchanges and Clearing Ltd (HKEx) is acquiring majority stake in a Shenzhen-based fintech firm, a rare investment that signals the exchange operator’s aim to bolster its financial markets technologies.
Hong Kong’s stock market operator announced on Wednesday that it has entered into a preliminary agreement to buy 51 percent of Ronghui Tongjin Technology, a subsidiary of Shanghai-listed Shenzhen Kingdom Sci-Tech Co.
Financial terms of the deal were not disclosed.
Ronghui Tongjin is a technology services provider that specializes in financial exchanges, regulation technologies, and data applications.
“Global capital markets are being propelled forward by technological developments, and we are very pleased to have signed a letter of intent today with Ronghui Tongjin,” HKEx chief executive Charles Li said in a press release.
“As committed technology partners, together we will seek to further enhance our existing capabilities, expand our reach and create growth opportunities,” he added.
Ronghui Tongjin is expected to help reduce HKEX’s reliance on third-party vendors, and assist the exchange operator in managing development costs and mitigating implementation risks.
HKEX will also benefit in the longer term from Ronghui Tongjin’s network and technological capabilities to develop future IT strategic initiatives, tapping into new market segments and client bases.
The parties intend to complete the transaction, subject to the signing of binding agreements, in the second quarter of 2019.
Tapping technology capabilities from fintech firms and startups, HKEx announced a partnership with US-based blockchain startup Digital Asset in October last year, aiming to develop a post-trade processing platform powered by blockchain technology, following successful completion of a prototype solution for Stock Connect.
The two firms plan to explore the development of a blockchain-powered platform for HKEx’s Northbound Stock Connect program, which allows Hong Kong market participants and global investors to trade China-listed A-shares.
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