Banking Investment News

SWIFT trials blockchain for proxy voting

proxy voting

Today SWIFT announced a new blockchain proof of concept (PoC) for e-Voting in the Asia Pacific. The PoC is in conjunction with the securities software provider SLIB and the Singapore Exchange (SGX). Deutsche Bank, HSBC and Standard Chartered Bank are participants, and DBS bank and SGX are involved as participants and issuers.

The aim is to simplify the management of shareholder meetings and proxy voting. A large proportion of stocks are not physically held by the stock owner. Invariably a broker holds them on their behalf and stores them at a Central Securities Depository. So when it comes to voting during a listed company meeting, a shareholder’s wishes need to be communicated through multiple parties.

“The expression of shareholders’ rights is often limited today by non-transparent, complex and inefficient paper-based processes,” said Lisa O’Connor, SWIFT’s MD of securities, treasury & standards, Asia Pacific. “The emergence of blockchain technology is a new opportunity to look at improving these processes. It is also an opportunity for SWIFT to offer flexibility in the adoption of this new technology through the re-use of ISO 20022 based solutions together with a high level of security and resilience that our industry requires.”

While SWIFT is best known for its payments messaging network, it also has a proxy voting solution. So it’s enabling the PoC participants to use their existing SWIFT network infrastructure to communicate.

The PoC’s purpose is to test the voting system in collaboration with a Central Securities Depository where the data is on a permissioned blockchain. Specifically, it’s combining ISO 20022 messaging with blockchain for interoperability. SWIFT is also experimenting with hosting third-party applications in its sandbox.

“Proxy voting remains today an untapped area for asset servicing automation, with many paper-based processes,” commented Jyi-chen Chueh, Executive Director and Head, Custody Services, Standard Chartered Bank. “Enhancing market best practices through industry collaboration sits at the very core of our DNA at Standard Chartered. The co-design of an e-Voting market utility which combines blockchain technology with ISO standards could pave the way for game-changing benefits for both the investor and issuer communities.”

SLIB developed the blockchain solution on SWIFT-provided infrastructure using Hyperledger Fabric technology. Last year SWIFT tested Hyperledger Fabric for its payments messaging service with a mixed conclusion.

Other blockchain proxy voting projects

US corporate services company Broadridge has been very active in proxy voting experiments, most recently in Japan but also at multiple Santander annual general meetings.

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).

Updated with technology details


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