At the end of each semester, the Institute for Law and Economics (“ILE”) presents its Corporate Roundtable, a premier event that brings together members of the Institute’s associate faculty and other academics with corporate executives, practicing attorneys, judges, investment bankers, and public policymakers. Each roundtable takes up current issues that emerge from the research and teaching of the Institute and provides a forum for lively discussion. This spring’s Roundtable, “Securities Intermediation and Technological Changes: Loaning, Owning, & Voting,” was no exception, despite ILE’s moving it to a virtual format.
Jill E. Fisch, Saul A. Fox Distinguished Professor of Business Law and Co-Director of ILE and Lawrence A. Hamermesh, Executive Director of ILE, moderated the panel, which included Alex Lebow (Co-Founder, Say), Charles W. Mooney, Jr. (Charles A. Heimbold, Jr. Professor of Law, University of Pennsylvania Carey Law School), Warren Pennington (Principal, Vanguard), Mark Smith (CEO, Symbiont), Michael Tae (Senior Vice President of Corporate Strategy, Broadridge Financial Solutions, Inc.), and Ted Yu (Chief, Office of Mergers & Acquisitions, U.S. Securities and Exchange Commission).
After establishing the framework for the program, including discussing the nature of our intermediated securities holding system, the costs and benefits of that system, the need to reexamine the existing structure, and how to introduce greater transparency and flexibility while retaining the benefits of the current system, several of the panelists reviewed how technological changes might affect the structure of the securities registration system.
They described how blockchain technology could create solutions to clarify ownership and enhance governance and how existing database solutions could facilitate digital shareholder engagement and address economic inefficiencies of the current system, with emphasis on the potential for blockchain mechanisms for voting and ownership to reinvigorate shareholders’ voice in governance. They also discussed leveraging distributed ledger technology and smart contracts as a means to reduce the governance role of intermediaries.
Before opening up the discussion to the larger group in attendance, the SEC representative described the pros and cons of innovation from the regulator’s perspective, and limits on the ability of a regulator to evaluate the costs and benefits of technological change. He also addressed current stresses and innovations in the securities field engendered by the coronavirus pandemic.
Attendance for the program was at least as, if not more, robust than normal, with many participants expressing gratitude for the opportunity to participate in a quality program and to see so many other faces. Indeed, offering the program in virtual space enabled many to participate who otherwise may not have traveled to Philadelphia to attend in person. The success of all of ILE’s virtual programs this spring has prompted ILE’s directors to consider offering more livestreaming opportunities even after the return to in-person programming.