Nasdaq completes ‘successful’ blockchain e-voting trial
Mon 23 Jan 2017
U.S. stock exchange Nasdaq has released the findings of a recent blockchain e-voting trial, declaring the proof of concept system a ‘success’.
The test was conducted across the Tallinn exchange in Estonia in 2016 and aimed to reduce the complexity and cost of organising shareholder voting. The experiment hoped to encourage investor engagement and participation at voting activities linked to Annual General Meetings (AGM) and trading and settlement issues.
Using digital identification solutions provided by Estonia’s e-Residency platform and smart contract technology from startup Chain, Nasdaq created a system through which digital assets marking voting rights and tokens used to cast votes were distributed to each shareholder.
A progress report on the project, Is blockchain the answer to e-voting? Nasdaq believes so, has been published by Nasdaq representatives Richard DeMarinis, Principal Software Engineer of Enterprise Architecture, Hedi Uustalu, Head of Issuer Services, and Fredrik Voss, Head of Blockchain Strategy.
In the update, the trio explains: “The system uses the blockchain in the traditional way to record the ownership of securities as reported by the central securities depository (CSD). Based on those holdings, the system also issues voting right assets and voting token assets for each shareholder. A user may spend voting tokens to cast their votes on each meeting agenda item if they also own the voting right asset. This model successfully demonstrated how a blockchain could be used for something other than transaction settlement.”
According to Nasdaq, overall feedback on the trial was positive. Participants noted, however, that the system needs to deliver increased mobile support to encourage greater participation, such as a dedicated app for casting votes.
Estonian financial firm LHV Group was one of the companies involved in testing the blockchain voting system. The company’s CEO, Madis Toomsalu said: “It is a good initiative and has a lot of potential. Testing of the prototype was convenient and simple. If the future solution enables mobile ID authentication as well and the security is granted, then we would definitely consider using the product in the future.”
In the next stages of development, the exchange operator plans to continue developing blockchain frameworks for shareholder voting processes, as well as for other business areas in order to improve efficiencies, strengthen performance and mitigate risks.