Market finds solutions as it waits for ASX CHESS replacement
Financial Review: A fintech spun out of Citi’s custodian banking arm says it has already set up a platform to bring much-needed transparency and speed to proxy voting, an area of the market that the ASX’s troubled distributed ledger technology CHESS replacement was meant to fix.
Last Wednesday, ASX announced the CHESS replacement’s fourth delay, confirming that the April 2023 timeline was no longer achievable. ASX did not set a new schedule for its completion and corners of the market have started to doubt whether it is too ambitious.
But Proxymity chief executive Dean Little said his business, which started as a standalone entity during the COVID-19 pandemic in 2020, was using technology that market participants already understood and knew how to use to resolve the issues plaguing proxy voting for market participants.
“We chose technologies that they all use and trust today, which would reduce the cost and allow faster adoption,” Mr Little said.
More than 600 local market issuers have already signed up to use Proxymity’s solution, which speeds up proxy voting and makes it more transparent. Custodians JPMorgan and BNP Paribas, which owns a stake in Digital Asset Holdings, the developer of the DLT CHESS replacement, have also now backed Proxymity.
“The issuer benefits, getting votes up to 14 days earlier than they were, compared with as little as 26 hours previously, and they can see who is voting behind these large accounts,” Mr Little said.
“Issuers and investors can communicate more effectively by the value chain they use.”
The platform already operates in 22 markets and is working with the world’s biggest global custodians, who can use the same technology to solve similar problems in markets where they operate. Proxymity has offices in London, Manchester and now Melbourne, with technology staff in Europe and Israel, according to Mr Little.
Backed by BNY Mellon, Citi, Computershare, Deutsche Bank, Deutsche Börse, HSBC, JP Morgan, State Street and most recently, BNP Paribas, Proxymity is already being used by 600 issuers connected via Computershare in Australia.
Mr Little said the Proxymity solution could sit alongside the ASX’s planned CHESS replacement project if and when it was built.
“It can sit alongside that, absolutely, but if the market has already solved the problem to bring the solutions to the market now, why would you change it?” he said.
In March, market participants called for a drop-dead date to be imposed on ASX or for a scaled down “plan B” option to be developed, involving “off the shelf” technology.