Hong Kong Exchanges and Clearing Ltd (HKEX) is pleased to announce plans to digitize and automate the in-kind creation and redemption process for relevant exchange-traded products (ETP) in 2025 through the adoption of a “web-based platform, subject to technical readiness and regulatory approval.”
This platform will be integrated into the ETP creation and redemption process, connecting ETP participants with the use of Distributed Ledger Technology (DLT) and smart contracts, and will help “increase overall ETP market efficiency, supporting the growth of secondary market activity for ETPs.”
HKEX’s Head of Exchange Traded Products, Jean-Francois Mesnard-Sense, said that speed and efficiency are “critical in an increasingly dynamic market environment. With ETP being one of their fastest-growing products, HKEX is pleased to introduce this new digital enhancement.”
They added that it will not streamline operations for our market participants, and also drive liquidity in the product ecosystem, “supporting the vibrancy of our ETP marketplace and strengthening Hong Kong’s role as an international financial centre.”
This enhancement is part of the Group’s commitment to elevate the competitiveness of its international ETP ecosystem, replacing manual, paper-based processes currently present with a goal to simplify the “creation and redemption procedures of ETPs and boost market activity.”
HKEX has continued to support the development of the ETP market in recent years with measures including the introduction of the “ICSD ETF settlement model in Hong Kong in 2019, the implementation of a new spread table and a new continuous quoting market-making regime in 2020, as well as the inclusion of ETFs in Stock Connect in 2022.”
Since 2020, HKEX’s ETP business has grown “29 per cent a year, with average daily turnover reaching HK$17.9 billion in the first ten months of 2024, above the full-year ADT trading record set in 2023.”
As at the end of Oct 2024, there were “194 HKEX-listed ETPs and 26 issuers participating in Hong Kong’s ETP market.”
As covered, Hong Kong Exchanges and Clearing Limited is a publicly-traded company and one of the global exchange groups, offering a range of equity, derivative, commodity, fixed income and other “financial markets, products and services, including the London Metal Exchange.”
As a so-called “superconnector” and gateway between East and West, HKEX facilitates the two-way flow of capital, ideas and dialogue between China and the rest of the world, via its Connect schemes, diversified product ecosystem and its international markets.
HKEX explained further that it is a “purpose-led” organization which, across its business and via the work of HKEX Foundation, seeks to connect, promote and progress its markets and the communities it “supports for the prosperity of all.”