Capital markets News

Broadridge execute blockchain proxy PoC in Japan


Yesterday Broadridge announced that in November 2018 it completed a blockchain proxy voting proof of concept (PoC) in Japan. The initiative was in conjunction with ICJ, which is a joint venture between Broadridge and the Tokyo Stock Exchange (TSE). ICJ runs an electronic voting platform for shareholder meetings.

The Broadridge solution used Quorum, the JP Morgan enterprise blockchain which is based on Ethereum. Broadridge also used Quorum for initiatives in other jurisdictions. The company said it developed the solution specifically for the Japanese market. Blockchain’s sweetspot is reconciling multi-party operations, and the Japanese market involves many players in the chain of custody. Even though shares are owned by one party, the custodian has possession. Hence the need for coordination to ensure the shareholder’s wishes are expressed in the proxy vote.

“The Japan project validated our view on how an interoperable blockchain platform can play a central role in raising corporate governance by creating end-to-end vote transparency and driving operational efficiency in light of the unique processing requirements in Japan,” said Patricia Rosch, President of Investor Communication Solutions, International at Broadridge.

The companies participating represented more than 80% of the major Japanese stock indices.

Previous Broadridge proxy tests in other jurisdictions such as for the Santander AGMs were at a more advanced stage. In contrast, the Japanese test was a simulation of actions taken by local and global custodians, the central securities depositary, and local transfer agents.

“Blockchain is a terrific technology. It will enable higher levels of transparency and higher levels of confidence to all participants in the process,” Broadridge CEO Rich Daly told Bloomberg in November. “Through that technology, we’ve proven that you can have instant results of your votes being cast and confirmed back to you.”

Other blockchain proxy voting projects

Several organizations around the world have experimented with proxy solutions. Estonia’s Tallinn Stock Exchange has conducted pilots. In Canada, the TMX stock exchange created a prototype, and Russia’s National Settlements Depository created perhaps the very first blockchain pilot for proxy voting.

IBM is working with the Central Securities Depository of Poland (KDPW) to develop a blockchain-based e-voting system for Annual General Meetings (AGMs).

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