In October last year, NewsBTC author Nikhil Gupta reported on a keynote speech given by the Nasdaq Chief Executive Bob Greifeld at the Financial News Awards for Excellence in Trading and Technology, Europe 2015, in London. As part of the speech, Greifeld addressed the potential of the blockchain and its implications for financial technology. Specifically, he commented on two things – one, that before the close of 2015 blockchain based transactions would see clearing time reduced to less than ten minutes, and two, that the exchange was gearing up to apply blockchain technology to its proxy voting system, starting in Estonia. With a press release published by Nasdaq earlier this morning, both of these things are now a reality.
What is proxy voting?
As shareholders of a company, an individual has the right to vote on issues that company’s board puts forward for debate (that is, assuming the shares the individual holds have voting power). The voting takes place at an annual general meeting, and sometimes ad-hoc meetings called throughout the year if certain events call for them. Of course, not every shareholder of a company can attend these meetings. Proxy voting affords the shareholders who are unable to attend the opportunity to vote remotely. It’s a useful tool, but it’s been dogged with problems – primarily security issues, but also technological issues, miscounts, bugs etc.
By applying the blockchain technology to the proxy voting procedure, Nasdaq is hoping it can tighten things up on all counts. It should lead to a far more transparent system, reduce fraud, and make miscounts virtually impossible.
The exchange is putting the system in place in Estonia’s Tallinn Stock Exchange (a child exchange of the main Nasdaq exchange) through an integration with Estonia’s e-residency platform, which is a system put in place by the Estonian government to register, keep track of and facilitate control of Estonian business interests.
Here’s what Hans-Ole Jochumsen, President of Nasdaq, had to say on the integration:
On the heels of the successful execution of a Blockchain transaction in the US private market, we are pleased to further advance this technology in Estonia… We’re excited to see the development of this project over the coming months.
It’s just an experiment at this phase, and there is no guarantee that we will see this sort of system rolled out across other global exchanges, but to have a global behemoth like Nasdaq behind blockchain technology, and not just behind it, but actively incorporating the tech into its operations, is a great seal of approval for the blockchain concept.
If it’s successful, it could pave the way to another potential (and far more wide scale) application – electoral voting. Voter turnout has long been a huge problem in most developed nations, and is all pretty much all time lows in Europe, the UK and the US at present. Many technologies have been put forward to facilitate online voting, but as yet, none have proven secure enough to implement.
Blockchain technology might just be the answer, and this proxy voting application could be looked back upon as the first in a chain of applications that leads to a blockchain driven turnout resolution. Let’s see what happens…
