Portrait of Chris Perry of Broadridge Financial Solutions

Broadridge plans to enable T+1 capabilities for its clients.

Broadridge’s president talks to The Banker about its focus on driving efficiencies in capital markets, asset and wealth management, governance and compliance.

The financial industry is anticipating a turbulent 2023, with geopolitical tensions, inflation and a potential global recession fuelling a pessimistic mood in the markets.

Taking a pragmatic approach, Chris Perry, president of Broadridge Financial Solutions, highlights the opportunities that open up for technology firms, such as Broadridge, which are delivering pioneering solutions for the industries they serve.

“Technology is a huge enabler. Whether it’s medtech, edtech or fintech, the power of innovation will solve many of the challenges we face today,” he says.

Career history: Chris Perry 

2014 President, Broadridge Financial Solutions

2013 Global managing director, risk segment, financial and risk division, Thomson Reuters

2011 President, global sales, marketing and account management, Thomson Reuters

2008 President, market division, Americas, Thomson Reuters

2006 President, Americas, Thomson Reuters

Mr Perry points to Broadridge’s real-life application of distributed ledger technology (DLT) to help optimise capital for bulge bracket financial institutions. While some pundits have criticised DLT as a technology looking for a problem, the 50-year-old fintech embraced it early on and focused on building solutions that would improve efficiency in the financial industry.

In the capital markets, Broadridge looked at how DLT could solve the problematic area of repurchase agreements (repos). “We started with the issues in repo settlement, whether between an institution’s departments or institution to institution. These include the amount of capital that is tied up — even when inside the same entity — and the lack of real-time visibility. Broadridge leveraged this profound technology with an immutable record to expose where the repo sits at any point in the process,” he explains.

Broadridge’s DLT-based repo platform launched in pilot in June 2021. Since then, it has onboarded several clients, transacting more than $50bn in average daily volume, according to Mr Perry, with Société Générale being one of the latest banks to join the platform in September 2022.

Compliance innovation

In addition to capital markets, Broadridge focuses on three other market sectors: regulations, governance and asset/wealth management.

Regulatory compliance is a universal challenge for institutions, as they navigate complex and changing environments in different jurisdictions. Broadridge is a trusted partner in this space, according to Mr Perry.

“We are strong in regulatory communications,” he says. “We also help to mutualise the costs of regulation. If every firm has to spend money on regulation themselves, it’s an expensive proposition — not just for those firms, but for the industry as a whole. If they work with us, we can spread those costs [across the industry].”

For example, Broadridge quickly mobilised to provide a solution for the Shareholder Rights Directive II (SRD II), an EU rule that entered into force in September 2020. SRD II aims to increase transparency between issuers and their shareholders, as well as encourage investors to engage more frequently in shareholder voting activities. “It is a regulatory requirement, which would have taken resources away from other things, so we created a mutualised solution and now are supporting over 280 clients for SRD II,” Mr Perry explains.

For the market to adopt a third-party compliance solution, there needs to be a high level of trust in the provider. Mr Perry believes that the secret sauce to the market’s trust in Broadridge is its culture based on the “service profit chain”.

“If you have engaged associates who feel like what they’re doing is purposeful and fulfilling, then they will do a good job and will serve clients well,” he says.

Enabling good governance

SRD II is a directive in the governance space, which is another primary sector for Broadridge. “As a public company, we see ourselves as the poster child for governance because we connect shareholders with their futures through the communication of information relative to holdings and the management of their investments,” says Mr Perry.

For example, proxy voting and virtual shareholder meetings give voice to the shareholder and are important to the democratisation of investing. “In line with our purpose, which is making the financial lives of millions around the world better, we provide the broad-based investor community — not just the institutional investor — with the transparency to help them make intelligent investment decisions,” he says.

He emphasises that Broadridge does not influence shareholder voting, but provides information and an auditable voting process. “Companies count on us to provide proper voting of shares for their annual general meetings,” he adds.

The connected shareholder

The digitisation of proxy voting supports both better shareholder engagement and governance. Broadridge has focused on several solutions in this space.

Two years ago, it launched a mobile-first application called ProxyVote, which allows shareholders to use their phone to access, review and vote all their proxies, such as on members of the board or other proposals. According to Mr Perry, the app is evolving to vote on environmental, social and governance (ESG) and pay. “These are the kinds of things that we’re putting in the hands of an investor in an intuitive and intelligent way,” he adds.

With the aim of democratising proxy voting, Broadridge has partnered with BlackRock on pass-through voting, which gives investors more of a voice in how asset managers vote the proxies on the underlying equities that make up a given fund. Mr Perry says, “Pass-through voting allows BlackRock to pass the voting responsibility to the investor. While some investors don’t want that responsibility, we want to help ensure that is a decision taken by them, not the asset manager.”

Broadridge is also working with fund companies on a platform called Wealth InFocus, which allows the fund companies to send investors personalised information about their assets. “We’re in a world now where artificial intelligence (AI), data and analytics have made it possible for a personalised experience,” says Mr Perry.

ESG consciousness

The past few years have witnessed the retail investor industry embrace ESG and socially responsible investing. “It’s very difficult for any CEO to ignore this trend, as there are thousands of associates or employees who care and will vote with their feet. Today, companies need to serve their associates’ and clients’ interests,” he says.

To enable direct communication Broadridge has pioneered the Fifth Meeting, which is in addition to the quarterly earnings meetings; this is aimed specifically at the retail investor to be informed about what the company is doing.

We believe that public companies in the future will want to communicate directly to retail shareholders and we want to enable that

“We believe that public companies in the future will want to communicate directly to retail shareholders and we want to enable that. This concept of the Fifth Meeting gives them a platform to talk directly to the retail investor,” he explains.

Mr Perry firmly believes that it is possible to generate profits and be socially conscious at the same time. He says, “We can be socially conscious and make money; it’s not an ‘or’. I chair our ESG committee and we wake up every day thinking about clients, associates and investors, and the ESG requirements to serve those critical constituencies.”

Private capital

According to Mr Perry, another recent market trend is the rise of private capital. Within the private equity industry, governance has become paramount to both institutional investors and fund managers. “It’s important to have visibility into private company issuance, which many don’t think of as issuance because they’re private deals,” he explains.

In June 2021, Broadridge used Amazon Managed Blockchain to revamp its fund lifecycle platform, Private Market Hub (PMH), which details owners, capital table, capital calls and more. The DLT-based platform provides further automated workflows between front-, middle- and back-office functions, as well as providing a consistent, secure, real-time view of the data.

It released a multi-jurisdictional version of PMH in September 2022 to ease the difficulties faced by asset managers with funds in multiple geographies. The platform allows all stakeholders in a fund’s lifecycle to participate around a common set of data and workflows via a unified user interface, irrespective of the fund’s jurisdiction. Northern Trust was the first to go live that month, with a group of North American clients.

Moving to T+1

Another big shift in the market are the proposals by multiple regulators, including the US Securities and Exchange Commission (SEC), to shorten the standard clearing and settlement cycle from the current two business days from trade (T+2) to one business day (T+1). The SEC has suggested March 31 2024 as the go-live date for T+1.

Mr Perry call this a “burning issue”, as it will help to lower risk, improve access to capital and enable more real-time investor ability. “Broadridge, as a primary market contributor and settler, will enable T+1 capabilities for our clients,” he says. “We’ve been part of the Securities Industry and Financial Markets Association’s working group on T+1 and we feel confident the industry will be in a position to hit the deadline.”

Whether the industry will go even further and introduce T+0 (settlement at the end of the same working day) or even real-time settlement is a hot topic. Mr Perry is not convinced that the market is ready for such a move. “Many things are uncovered — a ‘fat finger’ [error], poor coding, etc — between market close and settlement of the trade. If it was happening in real time, human errors would pass through so quickly that it would create an element of chaos,” he says.

Instead, he thinks a move to what he calls “T-dark” — same day to midnight — is more likely in the near term. As he explains, “Operators, compliance managers — those that ensure orderly markets — need time to ensure the final settlements are error free.”

However, he is optimistic that the market could move to real-time settlement when the computing power is strong enough. “And AI could be part of the solution,” he adds.

 

PLEASE ENTER YOUR DETAILS TO WATCH THIS VIDEO

All fields are mandatory

The Banker is a service from the Financial Times. The Financial Times Ltd takes your privacy seriously.

Choose how you want us to contact you.

Invites and Offers from The Banker

Receive exclusive personalised event invitations, carefully curated offers and promotions from The Banker



For more information about how we use your data, please refer to our privacy and cookie policies.

Terms and conditions

Join our community

The Banker on Twitter