Capital markets News

AST launches blockchain proxy voting solution for mutual funds

electronic digital vote voting

Yesterday, U.S.-based AST Fund Solutions announced the launch of ProxyIQ, a blockchain-based proxy campaign management solution for mutual fund issuers. 

AST provides proxy solicitation and shareholder communication services to mutual funds. It has a range of solutions to reduce the cost of proxy campaigns and regulatory mailings. By using blockchain to capture voting data, the firm aims to make proxy campaigns more secure, efficient and allow greater control to its clients. 

The whole point of proxy voting is to enable broader participation by shareholders in decision making. But that’s often a challenge.

Every shareholder has the right to vote on the governance decisions of a mutual fund or company, but they may not always be present at the general meetings. Additionally, shareholders may not hold these shares themselves. For example, a broker might keep them on the owner’s behalf at a Central Securities Depository. So, a shareholder’s vote needs to be communicated through multiple parties. 

AST is aiming to improve the degree of shareholder engagement by targeting those that are more passive.

“ProxyIQ was designed to deliver deeper engagement, an improved experience and greater transparency,” said Marty Flanigan, President and CEO of AST.

One issue with analyzing shareholder behavior is a fund manager could potentially choose to target shareholders more likely to vote for the desired outcome. We’ve asked AST if they have any safeguards for this.

“ProxyIQ can analyze shareholder behaviur across the campaign, and provide projections of how to best target unvoted pockets of shareholders,” said Paul Torre, President, Governance, Proxy & Ownership Services at AST. “This allows for more informed strategic and cost-effective decision-making and campaign execution.”

AST said the blockchain solution can handle proxy campaigns of any size and has been used with more than 60 projects so far. While speed and data security are the top priority, the platform enables advanced analytics, oversight of project status, and faster tabulation across multiple voting sources. 

Across the globe, some high-profile names have trialed blockchain proxy voting. Last year, interbank messaging service SWIFT said it was working on a blockchain proof-of-concept for e-voting in the Asia Pacific along with securities software provider SLIB and the Singapore Exchange (SGX). 

U.S.-based Broadridge previously used blockchain proxy voting in Japan, and a number of Santander AGMs. 

Some time ago, IBM was working with the Central Securities Depository of Poland (KDPW) for blockchain proxy voting. 

Elsewhere, Nasdaq’s Tallinn Stock Exchange in Estonia has conducted pilots. Canada’s TMX has a prototype, and Russia’s National Settlements Depository was one of the first to pilot the use case.