TMX Group, the operator of Canada’s largest stock exchange, announced a blockchain prototype that will power an electronic shareholder voting system, it announced on Thursday.
Working with technology services firm Accenture to develop the prototype, TMX designed an e-proxy voting system that will be available to public companies through TSX Trust, its transfer agency and corporate trust services provider. The technology’s aim is to improve the efficiency and accuracy of the voting process during annual shareholder meetings. A blockchain-based system means that shareholders don’t need to by physically present to vote.
The services was created in response to a consultation paper released by the Canadian Securities Administrators (CAS), says John Lee, vice-president of innovation and enterprise delivery at TMX Group.
“It was something that impacted our business as thought leaders in the space, we wanted to grab the bull by the horns,” he says. “One of the challenges we have is the integrity of the voting system is somewhat challenged. There’s multiple datasets requiring reconciliation across multiple parties.”
That’s a problem that blockchain, the distributed ledger technology that may be best-known as the architecture behind Bitcoin, can help solve. It keeps a record of every transaction in a system on file, stored with each peer that uses the system.
So in a data set that involves votes from shareholders on decisions about who gets to sit on the board, human hands can be removed from the equation and automated tabulating can take place in a secure setting. The system will be used by issuers, brokers, dealers, and intermediaries, to make up thousands of users.
TMX and Accenture started on the project in mid-January, Lee says. It’s not the first stock exchange to use blockchain to solve this problem.
“On a global perspective, competitors have the same industry challenge and they use blockchain in other jurisdictions,” he says. “NASDAQ used it for the private market space.”
It’s just one of many digital efforts ongoing at TMX, he says.
“We’re trying to transform our organization to a digital culture,” he says. “We’re trying to really innovate for our client base.”
