Broadridge Financial Solutions and ICJ, a joint venture of Broadridge and the Tokyo Stock Exchange, have successfully conducted the first Proof of Concept (PoC) of blockchain-based proxy voting in Japan, using Quorum as the underlying distributed ledger technology (DLT). ICJ-participating issuers represent 87% of the TSE First Section market cap, 97% of Nikkei 225 index constituents and 84% of Japan Exchange Group (JPX)-Nikkei Index 400 constituents.
Developed specifically for the Japanese proxy market, the DLT-based solution mirrored the proxy voting processes which included unique file transfer protocols on the ICJ electronic voting platform. Blockchain is ideally suited to streamline and automate complex reconciliation processes amongst numerous players in the chain of custody which exist in the Japanese proxy market.
The validation was performed in a test environment in which the role of local custodians, global custodians, the central securities depositary, and local transfer agents was simulated. The final positions of these organizations were loaded on the ledger and reconciliation was performed using smart contracts.
The result demonstrates that if position management is performed on a ledger for the purposes of proxy voting, the ledger could also be used as the single source of truth for subsequent data reference needs, resulting in the reduction or elimination of complex reconciliation processes. ICJ and Broadridge concluded the project in November 2018.