J.P. Morgan Launches AI System 'Proxy IQ' for Automated Shareholder Voting Decisions

Source: TokenPost Original Title: JP Morgan Automates Proxy Voting with AI… Pioneering the ‘Proxy IQ’ Era Original Link: https://www.tokenpost.kr/news/ai/322030 The largest US investment bank, JP Morgan, has decided to use an internally developed artificial intelligence system to replace external consulting firms when exercising voting rights at major corporate shareholder meetings. This marks a typical case of comprehensive AI technology application in the asset management field.

According to reports, JP Morgan announced through an internal memo that it will utilize an AI platform called ‘Proxy IQ’ to automate the decision-making process for voting rights. Traditionally, voting advisory firms analyze numerous proposals at shareholder meetings and provide institutional investors with recommendations to approve or oppose. Going forward, this role will be replaced by JP Morgan’s autonomous AI system.

This move aims to efficiently and consistently handle thousands of shareholder meeting proposals each year. ‘Proxy IQ’ has learned from over 3,000 historical proposals and can suggest the optimal voting strategy to fund managers for similar issues. The system can largely replace the functions of traditional voting advisory firms, enabling investment institutions to make faster and more independent judgments.

Voting advisory firms have long played an influential role in voting decisions on sensitive issues such as corporate governance structures and executive compensation for institutional investors. The two most influential global voting advisory firms are ISS and Glass Lewis, whose recommendations significantly impact actual voting outcomes. Last year, these firms recommended voting against granting Elon Musk stock options worth $1 trillion to Tesla’s CEO, attracting widespread attention.

However, recent criticisms argue that these advisory firms hold excessive influence. JP Morgan CEO Jamie Dimon has harshly criticized them, calling them “incompetent and should be eliminated from the market.” Excessive advisory behavior and opaque judgment standards may negatively affect corporate operations and potentially harm fair market order.

This criticism has also prompted regulatory actions by the US government. President Trump signed an executive order at the end of last year to strengthen the Securities and Exchange Commission (SEC) oversight of voting advisory firms, and the Federal Trade Commission (FTC) and Department of Justice are investigating whether these firms are involved in collusion and other unfair practices.

JP Morgan’s adoption of AI can be seen as a strategic choice by a specific bank, but in the long term, it is interpreted as a signal that will bring innovation to the overall voting rights exercise approach in the global asset management industry. It is expected that other major financial institutions may adopt similar technologies in the future, gradually undermining the position of voting advisory firms in the market.