Santander and Broadridge debut blockchain for investor voting
According to the duo, a solution that uses blockchain “enhances global proxy vote transparency and increases operational efficiency, security and analytics, which is beneficial for investors, issuers, agent banks and custodian banks”.
Sergio Gámez, global head of shareholders and investor relations at Santander, says in its case, “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 collaboration with JP Morgan and Northern Trust as custodian banks, they conducted the pilot on 23 March for Santander’s AGM, with participation from Banco Santander Corporate Services as the issuer’s agent and Santander’s blockchain lab. (It was in March but they have just gone public with this latest news.)
The pilot was run in parallel to the AGM, with blockchain being used to produce a “shadow” digital register of the proxy voting taking place in the traditional model. The co-collaboration model was extended to additional custodians participating during the Santander AGM.
Santander has over four million shareholders and 60.7% of the capital belongs to institutional investors.
It explains that the institutional investors had the opportunity during the last AGM to see how their votes could be counted and confirmed much more quickly (“it will be possible to do this instantly”) thanks to the blockchain technology, instead of having to wait two weeks in a process that includes manual activity by different intermediaries.
The participation for the new platform amounted to 21% of the total that participated in the AGM. Santander believes this could also help the motivation to vote, which improves corporate democracy. Santander’s quorum in the last AGM hit a “record” of 64.55% of the shareholders.
According to Santander, the ability to confirm votes to final investors anticipates the updated European Directive on Shareholder Rights that will come into force in June 2019, which will require sharing information among intermediaries on the same business day.
Santander and Broadridge conducted a proof of concept approximately one year ago in a closed blockchain environment, in collaboration with JP Morgan and Northern Trust.
Since then, Broadridge has established a distributed network among all participants, built on JP Morgan’s Quorum blockchain platform.