Hong Kong Exchanges and Clearing (HKEX), a state-owned company that manages several markets, including the HK Stock Exchange and the London Metal Exchange, will launch the Virtual Asset Index Series on November 15. The Index Series will consist of two components, providing benchmarks for Bitcoin and Ether pricing in the Asian time zone. The Reference Index provides real-time, 24-hour volume-weighted prices aggregated from top exchanges, useful for current spot price insights. The Reference Rate is tailored for financial product settlement, giving a standardized daily price fixed at 4:00 pm HKT to help with stability in financial transactions and contracts.

“We are delighted to introduce the HKEX Virtual Asset Index Series to meet the region's growing demand for this fast-emerging asset class. By offering transparent and reliable real-time benchmarks, we seek to enable investors to make informed investment decisions, which will in turn support the development of the virtual asset ecosystem and reinforce Hong Kong's role as an international financial centre,” - said HKEX Chief Executive Officer, Bonnie Y Chan.

CCData will administer and calculate the indices. The company is authorized in the UK as a benchmark administrator and is one of the leading providers of digital asset data and analytics. The HK indices’ calculating details haven’t been announced yet, but they will likely use the CCIX methodology, which blends transaction data from more than 300 exchanges, and DA Fixings, which allows end-of-day reference pricing for digital assets and balances digital volatility with traditional market rules.

CCData offers EU Benchmarks Regulation-compliant index solutions to institutions and market participants. The regulatory framework for benchmark administrators ensures the accuracy and integrity of financial indices. So far, CCData has, according to their own reports, delivered over 300 cryptocurrency benchmarks and over 250 investable indices in partnership Investable Indices with VanEck, Singapore Exchange, and others. The company’s other collaborations include Nasdaq and the Financial Times.

Earlier this month, CoinDesk acquired CCData and its retail arm. The deal aims to strengthen CoinDesk’s data offering, specifically the suit of CoinDesk Market Indices, which include specific sub-indices like the Bitcoin Price Index and the CoinDesk 20 index. These capture the performance of top digital assets and aim to reflect the general market condition. 

Other indices that tried to capture the digital assets market include the set of S&P Cryptocurrency Indices, the FTSE Grayscale Crypto Sector Index Series, the Bloomberg Galaxy Crypto Index and the Nasdaq Crypto Index. Although they are run by well-established and reliable companies, none of these indices has yet become the S&P500 in the crypto world. The rapidly changing crypto market landscape is the main issue in establishing a reliable index. Those indexes that primarily rely only on top-tier ETH and BTC performance do not reflect the holistic picture. At the same time, including altcoins is complicated as it is unclear how to allocate the weights properly. 

Crypto’s notorious volatility complicates the creation of trustworthy indices, even for separate coins. The prices at different exchanges at a given time can vary significantly due to the actions of certain market participants. As a result, the price determination is challenging. For example, at the time of writing, Coindesk's BTC to USD Price index differed from Nasdaq’s by almost $100. CCData addresses this issue by using volume-weighted average spot prices from multiple top-tier platforms that reflect actual market activity. 

Reliable benchmarks, especially EU-compliant, can appeal to institutional investors concerned with market manipulation, boost general investors’ confidence, and create a safer trading environment. This aligns with Hong Kong’s recent efforts to become a crypto hub and attract blockchain investment.

Earlier this year, several global crypto exchanges left the country due to strict registration requirements, but the authorities continued the licensing process and recently approved the first new exchange. The country plans to issue more crypto exchange licenses by the end of 2024.

Other blockchain-related efforts in the country include advancements in its e-HKD pilot program and a plan to issue the first Hong Kong dollar stablecoin.

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