Patricia Rosch

With regulations at the forefront of investors’ minds, easier proxy voting can offer both peace of mind and efficiency, says Broadridge’s Patricia Rosch

What is unique about the Broadridge proxy voting service?

Proxy voting is growing in importance as a way for shareholders to communicate with the companies they invest in. As more and more investments are cross-border, the complexity of connecting issuers and investors across multiple jurisdictions is increasing. Broadridge connects global custodians, and their institutional and pension fund clients, with corporate issuers around the world using scalable local solutions.

We offer global proxy distribution, meaning we send documents electronically to institutions so that they then have the opportunity to vote their proxies in a timely, efficient and accurate manner. Those votes come back to Broadridge and we tabulate, record and communicate the results.

The feedback from global custodians is that they would like to outsource more of the proxy process, as well as some of the functions that would have previously been completed in a local market by sub-custodians. Broadridge is now able to offer an end-to-end proxy solution, with new services including direct agenda sourcing, translation into English, execution of vote instructions in local markets and recording meeting attendance. We will still drive the proxy distribution and conduct vote collection, but as part of our Direct Market Solutions, we’ve added these additional functions at the beginning of the process and at the end.

What were the main drivers for this development?

There were two main drivers—the first is the significant market change in Europe that came with Target2-Securities (T2S). T2S necessitated changes related to things such as collateral management, but proxy is also a key component. It is much more efficient for global custodians to pick a single-source solution provider, so Broadridge has applied its local market expertise to develop direct market solutions.

We have seen interest in direct market solutions in countries like Australia and Hong Kong, proving that the straight-through-processing model is not only applicable in Europe, but it also addresses the demand for efficiency from clients around the world.

The second driver is that market participants are looking for operational efficiency. We have made considerable investments in over 100 different markets, and are able to offer a one-stop shop for these services.

In the past, local custodians and sub-custodians may have either developed their own versions of this, or relied heavily on manual processes or procedures. Direct market solutions deliver automation and a managed service allowing those companies to benefit from that scale. That means that when there are further changes in the market, we manage them and our clients can focus on their businesses.

What kind of benefits do the institutional investors see?

Every local market is different, so we have to be able to work effectively with particular market participants. For example, we have a joint venture with the Tokyo Stock Exchange called Investor Communications Japan (ICJ). Here, we are working with the central securities depository and the other market participants to connect investors worldwide to the Japanese issuer community.

We have had a relationship with the Tokyo Stock Exchange since 2004. At that time, investors had to submit their votes 10 days before the meeting date, and we have now reduced that to one day. The more time an institutional investor has to review the materials, the more effective their decision-making can be, and that has been very well received by investors around the world. From an efficiency perspective, we are always looking at how we work with the market participants to benefit issuers and institutional investors as well as custodians, and ensure that we’re facilitating better proxy distribution and voting.

As proxy voting is made easier, are you finding more investors are using their votes?
Definitely. Every year we see an increase in votes. Globally, we saw a 12 percent increase in shareholder voting last year, and that’s good for public corporations and good for corporate governance. The joint venture in Japan actually came about in order to generate more cross-border investment by making proxy voting easier, so the impact on capital markets can be really positive. The newly introduced Japanese Corporate Governance Code encourages participation in ICJ as a means of improving governance through a more efficient and effective proxy model.

If a market wants to increase foreign investment, it has to be able to demonstrate a good governance infrastructure. Investors will be more willing to invest in markets where they know the regulatory framework, and processes to support it, exist. Vote entitlement and annual meetings are a big part of that.

Good corporate governance means more transparency, which means more investment. If people are confident in a jurisdiction, they will invest there, and that is what we have seen in Japan.
There has also been more and more importance placed on understanding the proxy process, and vote entitlements are now taken very seriously. Today, when we ask global custodian clients what their priorities are, proxy voting is one of them, because institutions want to show their clients that they’re investing responsibly.

Understanding market changes and business drivers, like the need for greater operational efficiency, ensures that solutions that enable cross-border proxy processing continue to evolve to meet participants’ needs.

The latest interviews from Asset Servicing Times
The UK’s pensions industry is facing challenges from all angles, but KAS Bank’s cost transparency dashboard is here to lend a helping hand, says Pat Sharman
Real Estate Investment Times

Visit our sister site
for all the latest real estate investment news
View interviews section
The latest features from Asset Servicing Times
Gerard Bermingham and Madhu Ramu of IHS Markit explain how firms can avoid the pitfalls of bad corporate actions data
With the industry in perpetual change, it’s important for firms to work together to take advantage of big data, according to Roy Kirby of SIX
Join Our Newsletter

Sign up today and never
miss the latest news or an issue again

Subscribe now
As technology developments shape the world around them, financial services firms are starting to adapt. This year’s Sibos conference outlined where the industry is settling in, and where there are still milestones to pass
Rocky Martinez considers how AI can help improve post-trade processes, and how SmartStream’s new reconciliations solution is moving a step in the right direction towards helping firms keep costs at sustainable levels
New regulations, new competition and new cost pressures mean custodians and sub-custodians have more balls in the air than ever before
Mark Aldous, head of managed services for Delta Capita, discusses product governance and the need for more cooperation between manufacturers and distributors before the 3 January 2018
The past decade has seen significant change in securities services, but some challenges lead to lessons learnt, says Deutsche Bank’s Satvinder Singh
Artificial intelligence is already a reality in daily life, and it has a place in financial services, says Matt Davey of Societe Generale Securities Services
View features section
Country profiles
The latest country profiles from Asset Servicing Times
The Asian market may be improving on the harmonisation front, but the situation is still far from ideal. Experts discuss what there is still left to do
Brazil is hogging the limelight from its South American neighbours. But, although reforms are in full swing, there is still work to be done
Securities Lending Times

Visit our sister site
for all the latest securities lending news and analysis
No nation is an island, and the Polish CSD has post-trade services to cater to all of Central and Eastern Europe, says KDPW’s Iwona Sroka
In a region as geographically, culturally and economically diverse as Asia, funds passports have a tricky road ahead if they’re to redefine the industry
Amid cross-border restrictions and tightened belts, Luxembourg’s kingdom of real estate investment won’t be crumbling any time soon
The Chinese market has taken a knock to its confidence, but despite its size, it is still merely an emerging market, and must take these setbacks in its stride
Rich in sunshine, cork hats and tired clichés, Australia’s funds industry doesn’t buck the trend, boasting record levels of assets under custody
As the Saudi Arabian stock exchange finally opens its doors to foreign investments, the influx from abroad will be in baby steps, not leaps and bounds
View country profiles section