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“The technology to try and address this problem wasn’t really something we could use until you looked at something like blockchain.”

Distributed ledger technology (DLT), more commonly known as blockchain and popularly associated with the virtual currency bitcoin, is a decentralized, distributed record of data or transactions. The database characteristics and immutable nature of the technology make information transparent and easy to track, and large-scale hacking extremely difficult.

Banks and other large financial institutions have been ramping up efforts to develop practical applications using blockchain. Proponents say it will help make some of their most burdensome back-office processes, such as the clearing and settlement of securities, simpler, cheaper and more transparent.

Nasdaq Inc, one of the world’s largest providers of technology for exchanges and clearing houses, uses blockchain to power its U.S. market for shares of private companies and has been testing it to run proxy voting for companies listed on its exchange in Estonia.

Lee said the technical components of another prototype in partnership with certain members of the Liquidity Alliance are also nearing completion. Participating alliance members include Deutsche Borse, Clearstream, Strate and VPS. That blockchain project addresses how a collateral business can operate in a multi-jurisdictional environment.

TMX’s new proxy voting system prototype still needs regulatory approval before it can be tested live, the company said.

“There’s always constant dialog taking place. As you can imagine, the TMX group is a heavily governed organization,” Lee said, noting that talks would involve a number of federal and provincial regulators.

© Thomson Reuters 2017