Today Santander announced it ran a second pilot for blockchain investor proxy voting at its latest annual general meeting (AGM). The advantages of the solution are enhanced global proxy vote transparency, increased efficiency, security, and analytics. Parties that benefit include investors, issuers, agent banks, and custodian banks.
Broadridge Financial Solutions partnered with Banco Santander as well as JP Morgan and Northern Trust. For last year’s AGM, they ran a first proof of concept built on a private Ethereum blockchain.
This year they used JPMorgan’s Quorum blockchain technology and created a distributed network among all participants. In other words, different participants operated nodes or servers in the network.
Given the project is a pilot it ran in parallel to the AGM producing a “shadow” digital register of the proxy voting. Participation in the pilot accounted for 21% of the total that participated in the AGM.
Santander makes a good test case because the company has over four million shareholders and over 60% of the capital belongs to institutional investing. The system can quickly count and confirm those investor’s votes compared to the more manual process which takes as much as two weeks.
Sergio Gámez, global head of Shareholders and Investor Relations at Banco Santander, said: “In the case of Santander, having very fragmented capital, it is very important to ensure the participation by investors and shareholders, and this year using blockchain technology for the institutional vote has been a great help in terms of transparency and agility across the vote lifecycle.”
In addition to using the solution for its own AGM, Santander can also offer the service to its clients. One of its divisions acts as issuer’s agents in AGMs for more than 50 large clients.
Other proxy voting pilots
Several organizations are experimenting with a proxy solution. Nasdaq’s Tallinn Stock Exchange in Estonia has conducted pilots. Canada’s TMX created a prototype, and Russia’s National Settlements Depository was probably the first to pilot this use case.
Last week Broadridge was awarded a US Patent related to proxy voting and repo agreements.