What does Broadridge do?

We're New York Stock Exchange listed, we're a spin-off from ADP [Automatic Data Processing, which completed the spin-off of its brokerage services group in 2007, leading to the creation of Broadridge, an independent public company]. We have a market cap of about $3 billion and 6,500 employees worldwide. We're very focused on providing solutions and services for the financial services industry.

We have two divisions; our securities processing solution makes up 30 per cent of the business overall, specialising in back office and mid office and a wide range of transaction processing services.

The other side of the business, which makes up the other 60 to 70 per cent, is investor communications - our core business.

That's what we're known for, especially in the US market where we have a large market share and large connectivity with issuers, and also with the broking community, the broker dealers in the US.

What is the difference in the US offering?

The role we play there is because the US market is a 'beneficial owner' market rather than the direct registers market of Australia.

Broadridge acts as a hub or communication point between issuers, brokers and the underlying clients of brokers. So when it comes to the annual general meeting or investor communications, Broadridge handles the messages from the company to clients. With broking, we handle 98 per cent of the beneficial ownership in the US market. That could be broker statements, those sorts of communications and corporate actions.

When you take that global view, we have large global presence; we do support the large global banks for their cross border activity and local market activity.

Also in the domestic market we'll support companies with local market solutions. One quick statistic: In Australia, Broadridge typically processes about 80 per cent of institutionally voted shares, which gives you an idea of the scale.

So if you were to imagine that 40 to 50 per cent of shares in any meeting get voted, and 80 per cent of those are coming through our platforms, we're setting up the meeting, taking that to institutions around the world, taking them in and processing them.

What else does the company offer?

We also provide a dedicated business process outsourcing (BPO) business. That's been a relative newcomer, but it's an area where we see more growth across the business.

It's grown from the US business, where we support over fifteen large broker dealer including the likes of Bloomberg and Charles Schwab. Those businesses have chosen Broadridge to run their security or broker/dealer back office.

Broadridge is essentially providing all the servicing around the operations of their back office.

Are you seeing growth in the Australian offering?

The interest in outsourcing has come about through the regulatory pressures. Regulatory pressures create two issues:  one is how to respond and adhere to the regulations, and the other is how much work you need to do to meet the new standards.

Businesses like Broadridge can help in both those areas for providing solutions but also in providing guidance for what the best solution to have in place might be, as a result our experience.

We also believe there is lots of competition and consolidation within securities businesses generally.

Having an efficient back office with costs being as low as possible can assist securities businesses to focus on the important areas of growing their business.

The focus remains on the short term, on domestic market regulations around the super industry, with opportunities around SMSFs.
 
Lots of global banks that operate in Australia and domestic securities business are challenged by offshore regulations, as well in terms of Dodd Frank and FATCA (the Foreign Account Tax Compliance Act), the emerging overseas rules that affect all players in the global securities industry.

What impact are technological developments having?

The emergence of new technology and the decision whether to invest in new technology or whether to remain on legacy systems is a constant challenge for institutions.

The challenge is the perceived risk of making change versus the unknown or undefined benefits of making the move.

Wouldn't it be a case of when, rather than if?

In some cases, that can be determined by the life or supported life, of the underlying operating system, which can be constrained. In other cases, it can be that the cost of maintaining the legacy platform is prohibitive and is eroding the competitiveness of the business in an ever-changing market.

It's part of the challenge around regulatory systems, with regulatory pressures - how can these systems efficiently adapt? In lots of cases, a securities business has to look at best of breed alternatives and in lots of cases the decision to change will make sense from a commercial and operational, efficiency and risk reduction basis.

How is Broadridge specifically affected by technological change?

For Broadridge, we need to keep innovating to meet the needs of our clients and to ensure our clients are able to access the latest technology from Broadridge. So, for example, we've done a lot of innovation around digital mail where we are providing the financial data solution for the US digital mail service in partnership with Pitney Bowes.

We've done things around shareholder meetings, we've created the world's first virtual shareholder meeting, combined shareholder voting with an audio and video experience - we've run over 100 of those meetings.

We were one of the first to provide a mobile phone voting app for company meetings as well. So those are some examples of how we've had to invest in new technology and lead by example, and that's something we're constantly looking to do to ensure we remain relevant so we can assist our clients in the best manner.

Is there are reason you're looking more at Australia or the Asia Pacific region now?

Broadridge has been in Australia since 2000, and we have continued to be very committed to the region. We have offices around the region including in Singapore, Hong Kong and Tokyo. In Australia we run our client service desk for the investor communications, which essentially covers all of the institutions and funds who use Broadridge for their proxy voting service.

That's a sign of how we've been committing our investment to Australia and using that as a base to grow our business across the region.

We also provide, maintain and upgrade connectivity with the Australian Securities Exchange and Australian clearing and CHESS, Chi-X, all the various connectivity points in this market.