SWIFT has announced a proof-of-concept (PoC) on e-Voting, using distributed ledger technology (DLT) in collaboration with multiple custodians, including Deutsche Bank, DBS, HSBC and Standard Chartered Bank.
The PoC will explore whether DLT can help simplify the currently inefficient management of shareholder meetings and the associated voting processes that are often time-consuming and resource intensive.
The PoC will run through the first half of the year and test the deployment of a voting solution in collaboration with issuers and a Central Securities Depository (CSD), where the information is stored and managed on a permissioned private blockchain.
SWIFT said it will also demonstrate the viability of hybrid solutions based on ISO 20022, combining messaging and DLT to foster interoperability and avoid market fragmentation.
DLT has been touted as a solution to more low-risk processes such as proxy voting in its infancy as the financial markets explore the broader use of the technology.
A CSD Working Group, comprising of representatives from Clearstream, Strate, Nasdaq, NSD and Swift, explained in 2017 that a DLT-based product using ISO 20022 standards could easily be adopted for e-proxy voting.
Since then South Africa’s central securities depository (CSD) said it would deploy blockchain technology developed by Nasdaq to bring electronic proxy voting to its capital markets.
In January this year, Broadridge conducted the first PoC of a blockchain-based proxy vote in Japan. Alongside ICJ, a joint venture company of Broadridge and the Tokyo Stock Exchange, the proxy vote took place using Quorum as the underlying DLT.
SWIFT said will facilitate the PoC in its DLT sandbox testing environment with Deutsche Bank, HSBC and Standard Chartered Bank joining as participants, while DBS and the Singapore Exchange (SGX) join as both participants and issuers.
The participants will reuse the SWIFT network and their existing SWIFT infrastructure and interfaces to access, test and validate the applicability of DLT.
“Shareholder voice in corporate decision making is stifled by the existing paper-based voting process,” said Tony Lewis, head of securities services, HSBC. “Technology is the solution to enhancing shareholder say. e-Voting using DLT has the potential to create greater efficiencies, transparency and participation. Through collaboration amongst key market players, the PoC has a real opportunity to revolutionise security services in Singapore. As the world’s most innovative investment bank, we are delighted to be contributing to another project building on the Republic’s position as a global FinTech hub.”