The similarity of the proxy voting process to the corporate actions process has in some ways negatively impacted efforts to automate proxy voting, but a recently initiated pilot of new Swift proxy voting messages could herald in greater efficiencies to the process.
This was the message from Chad Spitler, principal/associate director, corporate governance and proxy at Barclays Global Investors, speaking during the corporate actions focus day preceding FIMA 2006 earlier this month in London.
The problem has been that because the proxy voting process is similar to the corporate actions process, there have been efforts to fit proxy voting into the corporate actions model, but, said Spitler, “it’s just different enough that it doesn’t fit”. With the increasing emphasis on good corporate governance though there is a definite requirement for automation of a process complicated by the involvement of multiple players with multiple roles, and beset by a lack of common definitions, the absence of an audit trail and a proliferation of proprietary systems.
According to Linda Bookheim, senior business manager, North America, Securities Industry Division at Swift, its new proxy voting messages are designed to replace existing agreed market practice for proxy using ISO 15022 messages. “Due to problems with processing the proxies in back office systems, the market recommended we create a set of messages specifically for proxy,” she says. “We have now done that using the ISO 20022 methodology. With the help of industry practitioners we have created eight XML messages covering the entire proxy business flow.” If the pilot currently under way proves a success, the plan is to make the messages live on Swiftnet in Q4 2007.
BGI is involved in the Swift pilot, working with Euroclear and proxy voting solutions provider ADP Investor Communication Services, and Spitler told FIMA delegates the experience of agreeing the new messages was a broadly positive one, though he did say: “I would have added more data elements, but the custodians wouldn’t have any of that!” He confirmed that BGI would be encouraging all its custodians to sign up and start using the Swift proxy voting messages.