Financial messaging giant SWIFT has teamed up with the Singapore Exchange and four banks to trial a platform for e-voting based on blockchain tech, the firm said Tuesday.

Joining the effort to see if distributed ledger technology (DLT) can help make shareholder voting more simple and efficient are Deutsche Bank, DBS, HSBC and Standard Chartered Bank, as well as securities software provider SLIB.

As in many areas of finance, shareholder voting on corporate decisions is made “cumbersome” by the current “time-consuming and resource intensive” paper-based process, SWIFT explained.

Explaining why DLT has the potential to help solve the issue, the firm said:

“Proxy voting, in particular, frequently results in error-prone and complex manual processes, which the industry can avoid by fostering greater transparency and automation.”

The proof-of-concept (PoC) trial sets out to test a DLT voting solution involving issuers and a central securities depository (CSD), with data managed over a permissioned private blockchain. The partners will also examine the viability of hybrid solutions that merge financial messaging standard ISO 20022 with DLT to boost interoperability and “avoid market fragmentation,” the announcement states.

Deutsche Bank, HSBC and Standard Chartered Bank will act as as participants for the effort, while DBS and SGX will act as both participants and issuers. It’s not clear from the announcement which CSD will be assisting the PoC.

SWIFT will host the trial in its sandbox testing environment, while the partners will use the SWIFT network and their existing SWIFT infrastructure and interfaces as they test the technologies.

As further aspect of the trial will examine SWIFT’s capacity to host applications in its sandbox and to reuse its security and interface stack for other purposes.

Soh Ee Fong, group head of Securities and Fiduciary Services at DBS, said:

“An innovative and seamless e-Voting platform in this industry is long overdue and DBS is pleased to join SWIFT in the PoC as both issuer and participant. … With this solution, shareholder meetings will not be the same again.”

Back in 2017, SWIFT assisted a consortium backed by a group of CSDs on plans to develop a similar distributed ledger proxy voting system. That project also aimed to adhere to the ISO 20022 standard in an effort to ensure that the voting system could be applied across a wide range of services.

SWIFT image via Shutterstock

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SIX Group, the Swiss stock exchange operator, has picked R3’s Corda Enterprise platform as the underlying blockchain for the digital asset trading, settlement, and custody service it is building.

Revealed exclusively to CoinDesk, SIX chose Corda Enterprise after spending a good deal of time kicking the tires of various distributed ledger technology (DLT) stacks, for several reasons: firstly, because the technology was designed for a highly regulated space, but also because of the flourishingopen-source Corda ecosystem.

Sven Roth, the chief digital officer at SIX Digital Exchange (SDX), said the fact that Corda spans other areas beyond capital markets such as insurance and stretches to things like identity also was a factor. He told CoinDesk,  

“This was very important to us because when we assessed different vendors, some of them were very focused on niche offerings and limited in their scope to very specific areas, such as post-tradefor instance, and we didn’t want to be limited to just that area of expertise. We assessed a lot of vendors and technology stacks – all the ones you can imagine.”

As stated back in July of last year, the goal for SDX is creating a regulated exchange platform for digital assets, starting with stocks and then exploring other tradable instruments and even growing to encompass tokenized versions of more esoteric physical assets such as fine art.

Roth said the platform, which will be launching in the second half of 2019, will begin with classical bankable assets such as equities, bonds, funds and structured products “that are already living on our DLT.”

“One of those [asset classes] will be available at launch. Then we have others living at the [central securities depository] of SIX today that then will be tokenized. We said we first want to have products that are only available on our DLT because then you don’t have issues with split liquidity, with who is the CSD and so on.”

Another area of focus for SIX is the handling of so-called security token offerings (STOs). Indeed, in an interview with Reuters last month SIX chairman Romeo Lacher said the exchange plans to eat its own dog food, so to speak, by looking to raise some money itself via an STO.

A SIX representative said this was something being considered but added no further detail on those plans. Roth confirmed that a regulated boilerplate for STOs, in general, was a central plank of the project.

“As you can imagine we need some product to define in the future what we would call security token offering or initial digital offering – so what today is an IPO.”

He added that a balance has to be achieved to provide “a reasonable MVP [minimum viable product], but not go overboard on what will be available at launch.”

Getting real

The selection of Corda Enterprise, the paid-for version of the platform as opposed to the open source Corda, is a significant win for R3, coming on the heels of last week’s news that blockchain builder MonetaGo had switched its underlying architecture from Hyperledger Fabric to Corda.

Speaking of the SIX deal, Charley Cooper, a managing director at R3 said,

“The first thing that’s important is the fact that a mainstream influential financial market infrastructure player has decided to launch an exchange for digital assets and do it on blockchain technology.”

Cooper went on to say the deal is a validation for Corda’s built-for-business approach, adding, “For these platforms to work for highly complex and heavily regulated markets and participants, you can’t take a traditional old style public version of blockchain and try to retrofit it to handle enterprise needs around privacy and scalability.”

The first commercial licensing of Corda Enterprise was last year with Dutch bank ING, but this is the first sale to a financial market infrastructure (FMI) provider, noted Cooper. 

(Another in the offing could come out of a recent proof of concept with SWIFT, integrating the Corda Settler application, an open source payments engine built by R3.)

Neither will it be the first time Corda has been used to tokenize equities. This was done by European collateral lending platform HQLAx which is now working closely with Deutsche Borse.

Cooper pointed out that many R3 members and investors are also SIX stock exchange trading members and ready to leverage the combined technologies.

That list includes ABN AMRO, Barclays, BNP Paribas, Citi, Commerzbank, Credit Suisse, CS Affiliates, Deutsche Bank, HSBC, Natixis, RBC, SocGen and UBS.

Summing up, Cooper framed R3 landing SIX as a vindication for enterprise DLT in general – though he couldn’t resist taking an implicit jab at competitors, concluding:

“You hear rumblings in the industry – is this real? The answer is actually ‘yes’. This is real and we are about to show it even if others haven’t been able to.”

Image courtesy of R3

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

Source: Coindesk