Bloomberg: Hong Kong Stock Exchange Is Intent to Acquire Blockchain Firm

November 26, 2018

On September 21st, Bloomberg published an article about the intention of the Hong Kong Stock Exchange (HKEX) to take over blockchain, amongst other tech sectors based on insider sources.

Bloomberg cited the concerns of people who know about this matter clearly. Most people sharing concerns stated that If that intention is indeed true, it will cause a change in strategy due to stalling trading links with exchanges in China. Leading the trade relation between U.S and China – the situation could find itself in a worser place than ever before.

Bloomberg’s sources asked to be anonymous, leaking a sensitive event that HKEK CEO Charles Li had discussed with at least three investment banks to diversify the exchange’s model. He possibly wants to take over the “data, analytics, and blockchain sector”.

They suggest a venture capital arms of U.S is what he has been looking for, including Stalwart exchanges CME Group Inc. and Nasdaq Inc. Nasdaq is a possible model for HKEX because of its experience in the technology field. It has 19 percent if its 2017 revenue from data products and 13% from market technology while HKEX generates almost 100% of its revenue from clearing and trading fees.

For potential technology acquisitions, Bloomberg’s sources suppose that HKEX is focusing on it in their two recent key HKEX meetings-one is a strategy discussion with senior managers on September 10, and another is a board member meeting on September 12. The exchange has the purpose to launch a three-year strategy plan starting in 2019 are under discussion for more details at the moment.

In the email to Bloomberg, Banny Lam, head of research at CEB International Investment Corp told:

The strategy is in the right direction but it is not easy to achieve the targets. HKEX needs to maintain a momentum of growth by exploring new businesses.

Bloomberg also said that HKEX had struggled to integrate their acquisition of London Metal Exchange in 2012. One of HKEX advisor divulged that there are concerns if the future deals could be successful.

Blockchain technology has gotten a positive progress in China. As a previously reported, the very infrastructure of major stock exchanges has step by step accept it an inroad like the world’s fourth-largest stock exchange-the Shanghai Stock Exchange (SSE). They released their plan to adopt technology to be used in securities transactions in the Earlier this summer.

The positive progress has happened not only in China but also all around the world. Besides the U.S or Europe, you can see the government of South Korea, Malaysia, Singapore, etc are planning to use blockchain technology. Australian may be the next market for Blockchain technology when the Australian Securities Exchange (ASX) is planning to use blockchain technology instead of its current system for processing equity transactions in spring 2021.


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