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Santander Conducts Proxy Voting Blockchain Pilot at AGM

Banco Santander has completed a blockchain pilot that it says improves the process of proxy voting during annual general meetings (AGMs).

For the project, announced Thursday, Santander partnered with global fintech firm Broadridge and custodian banks JPMorgan and Northern Trust, describing it in a press release as the “first practical use of blockchain” for shareholder voting.

However, it should be noted that other entities such as Nasdaq, the Abu Dhabi Stock Exchange and a group of central securities depositories, including Russia’s National Settlement Depository, have all conducted pilots, are developing systems or have launched platforms around the use case.

The Broadridge-built solution – piloted previously in April of last year – aims to improve transparency in the global proxy voting system, while also increasing security, efficiency, security and analytics, the release says.

The pilot was concluded on March 23 for the Spanish banking giant’s AGM and saw participation from Santander’s blockchain lab and Corporate Services, which acted as the issuer’s agent. The blockchain solution was used to produce a “shadow” digital register of the proxy voting system taking place in parallel using the conventional voting model.

Sergio Gamez, global head of shareholders and investor relations at Santander, said that, for a listed company like Santander, the AGM is one of the most important corporate governance events.

Gamez explained:

“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 life cycle.”

As mentioned above, Broadridge executed a similar pilot focused on proxy voting in collaboration with the same partners last April. The project used a private version of the ethereum blockchain as a backup system to more traditional voting software. The trial was conducted at an annual meeting at Santander Investments.

“The successful completion of a second pilot along with the next phase of our blockchain-based proxy voting solution demonstrates Broadridge’s continued commitment to developing innovative technology solutions in the re-imagination and improvement of global proxy,” said Patricia Rosch, president of investor communications at Broadridge.

Santander image via Shutterstock

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Broadridge Pilots Blockchain for Repo Trades With French Banks

Broadridge Financial Solutions has completed a blockchain pilot with two French banks aimed at recording the details of bilteral repurchase, or repo, agreements.

The U.S.-based investor services firm worked with Natixis and Societe Generale on the pilot, which Broadridge said had demonstrated a distributed ledger’s benefits for this kind of transaction. Specifically, those benefits include less manual intervention, reduced risk, greater transparency and faster processing, Broadridge said.

“Within the bilateral repo market, blockchain has shown that it can play an instrumental role in reducing operational cost and complexity,” Vijay Mayadas, president of global fixed income and analytics at Broadridge, said in a statement.

The company said that a private blockchain was used, based on the Hyperledger Fabric 1.0 codebase.

Repos are a form of secured short-term financing in which the borrower, typically a brokerage firm, sells securities (usually government bonds) to an investors and agrees to buy them back at a specified date and price. In bilateral repos, the parties are responsible for settling the transaction, rather than relying on a central counterparty.

While that may sound arcane, the market for repos is a significant one, with a notional amount outstanding of $2.3 trillion, according to the Securities Industry and Financial Markets Association. And Broadridge indicated it plans to do more with the technology in this area.

The trial’s success “lays the foundation for the development of broader collateral management solutions on blockchain,” said Jerry Friedhoff, head of Broadridge’s securities finance and collateral management group.

Broadridge has been actively testing out other use cases for blockchains in financial markets.

Earlier this year, the company took part in a blockchain pilot focused on proxy voting, in partnership with JPMorgan Chase, Northern Trust and Banco Santander. That test used a private version of ethereum as a basis.

Image via Shutterstock

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