Part One Introuctory Chapters 1
Chapter 1 Introduction 3
1.1 Global Convergence, Legal Responses 3
1.2 Methodology 6
1.2.1 Theoretical Framework 6
1.2.2 Comparative Law 7
1.2.3 Additional Method Issues 10
1.3 Outline 12
Chapter 2 System and Coherence 13
2.1 Introduction 13
2.2 Systemisation of Law 14
2.2.1 Relevance and Principles of Systemisation 14
2.2.2 A Mixed-Value Good 16
2.3 Coherence 17
2.3.1 Coherence in Systemisation 17
2.3.2 Relevance of Coherence 20
2.4 Coherence, Securities Laws and European Law 21
2.4.1 The EU and Systemisation 21
2.4.2 Horizontal and Vertical Coherence 22
2.4.3 Diagonal Coherence 23
2.5 Conclusion 26
Chapter 3 Immobilisation,Dematerialisation and the Law 29
3.1 Introduction 29
3.2 Reification,Intermediation and Dematerialisation 30
3.2.1 Reification 30
3.2.2 Intermediation 31
3.2.3 Fungibility and Dematerialisation 32
3.2.4 Contemporary Legal Characterisations 33
3.2.5 Conclusion 35
3.3 Conflict of Laws 36
3.3.1 Introduction 36
3.3.2 Lex Situs,Lex Societatis and Their Problems 37
3.3.3 PRIMA 38
3.4 Conclusion 40
Chapter 4 Practice and Risks of the Post-Trade Process 43
4.1 Trade,Confirmation,Clearing,Settlement 43
4.2 Clearing 44
4.3 Settlement 46
4.3.1 Typical Sales and Security Arrangements 46
4.3.2 Cross-Border Dimensions 48
4.4 Discerned Risks 49
4.4.1 Systemic Risk 49
4.4.2 Specific Risks 50
4.4.3 Legal Risk 52
4.5 Conclusion 54
Part Two Securities Laws of Selected Jurisdictions 55
Chapter 5 Belgium 57
5.1 Introduction 57
5.1.1 Trading,Clearing and Settlement 57
5.1.2 Sedes Materiae 58
5.2 Categories of Securities 60
5.3 Custody of Book-Entry Securities 61
5.3.1 Introduction 61
5.3.2 Securities Accounts 63
5.3.2.1 Entries in Securities Accounts 63
5.3.2.2 Ownership of Book-Entry Securities 64
5.3.2.3 Challenges to the Ownership of Book-Entry Securities 65
5.3.3 KB no.62 custody 67
5.3.3.1 Custody Structure 67
5.3.3.2 Securities Eligible 68
5.3.3.3 Deposit 69
5.3.4 Dematerialised Securities 70
5.3.5 Accountholder/Intermediary Relationship 71
5.3.6 Nature of Accountholder Interests 73
5.3.7 Intermediary Insolvency and the Treatment of Shortfalls 75
5.3.8 Intermediary Preference/Statutory Lien 76
5.4 Securities Transfers 77
5.4.1 Introduction 77
5.4.2 Moment of Transfer 77
5.4.3 Annulment and Finality 79
5.5 Creation and Enforcement of Security Rights 80
5.5.1 Introduction 80
5.5.2 Transfer of Title 80
5.5.3 Pledge and Attachment 81
5.5.3.1 Creation of a Pledge 81
5.5.3.2 Enforcement of a Pledge 83
5.5.3.3 Freezing of Securities Circulation 84
5.6 Conflict of Laws 85
5.7 Conclusion 87
5.7.1 Questions and Answers 87
5.7.2 Coherence 90
Chapter 6 France 93
6.1 Introduction 93
6.1.1 Trading,Clearing and Settlement 93
6.1.2 Sedes Materiae 94
6.1.3 Complete Dematerialisation 95
6.2 Categories of Securities 96
6.3 Custody of Book-Entry Securities 98
6.3.1 Introduction 98
6.3.2 Structure of Intermediated Custody 99
6.3.3 Non-Dematerialised Titres Au Porteur and Titres Nominatifs 101
6.3.3.1 Historic Background 101
6.3.3.2 Non-Dematerialised Titres Au Porteur 102
6.3.3.3 Titres Nominatifs 103
6.3.4 Accountholder/Intermediary Relationship 104
6.3.5 Nature of Accountholder Interests 108
6.3.6 Intermediary Insolvency and the Treatment of Shortfalls 111
6.4 Securities Transfers 112
6.4.1 Introduction 112
6.4.2 Moment of Transfer 113
6.4.3 Annulment and Finality 114
6.5 Perfection and Enforcement of Security Rights 117
6.5.1 Introduction 117
6.5.2 Transfer of Title 117
6.5.3 Pledge and Attachment 119
6.5.3.1 Creation of a Pledge 119
6.5.3.2 Enforcement of a Pledge 121
6.5.3.3 Attachment 121
6.6 Conflict of Laws 122
6.7 Conclusions 124
6.7.1 Questions and Answers 124
6.7.2 Coherence 128
Chapter 7 The Netherlands 131
7.1 Introduction 131
7.1.1 Trading,Clearing and Settlement 131
7.1.2 Sedes Materiae 132
7.1.3 Historic Background 133
7.2 Categories of Securities 135
7.3 Custody of Book-Entry Securities 136
7.3.1 Three Types of Custody 136
7.3.2 Custody With Loss of Ownership 136
7.3.2.1 Issues of Classification 138
7.3.2.2 Globals 140
7.3.3 Wge Custody 141
7.3.4 Accountholder/Intermediary Relationship 142
7.3.4.1 Wge Deposit 143
7.3.4.2 Retrieval and Distribution 145
7.3.4.3 Additional Contracts 147
7.3.5 Accountholder Interests 148
7.3.5.1 Section 3.7 BW 149
7.3.5.2 Community 149
7.3.6 Intermediary Administration 151
7.3.6.1 Instances of Representation 152
7.3.6.2 Direct and Indirect Representation 153
7.4 Securities Transfers 154
7.4.1 Introduction 154
7.4.2 Object and Moment of Transfer 155
7.4.3 Annulment and Finality 156
7.5 Creation and Enforcement of Security Rights 158
7.5.1 Transfer of Title 158
7.5.2 Pledge and Attachment 160
7.6 Conflict of Laws 161
7.6.1 Introduction 161
7.6.2 PRIMA 163
7.6.3 Securities Transfers and Security Rights 165
7.7 Conclusions 166
7.7.1 Questions and Answers 166
7.7.2 Coherence 170
Chapter 8 The United States of America 173
8.1 Introduction 173
8.1.1 Trading,Clearing and Settlement 173
8.1.2 Sedes Materiae 174
8.1.3 Harmonisation of State Law 175
8.2 Categories of Securities 177
8.3 Custody of Book-Entry Securities 178
8.3.1 Introduction 178
8.3.2 Indirect Holding Under the UCC 180
8.3.2.1 Securities Eligible 181
8.3.2.2 Securities Accounts 182
8.3.3 Accountholder/Intermediary Relationship 184
8.3.3.1 Common Law Concepts 184
8.3.3.2 Flexible Duties 186
8.3.4 Nature of Accountholder Interests 189
8.3.5 Intermediary Insolvency and the Treatment of Shortfalls 191
8.3.5.1 Federal Law 191
8.3.5.2 UCC 191
8.4 Securities Transfers 194
8.4.1 Introduction 194
8.4.2 Negotiability 195
8.5 Creation and Enforcement of Security Rights 199
8.5.1 Introduction 199
8.5.2 Pledge and Attachment 199
8.5.2.1 Creation 200
8.5.2.2 Perfection 200
8.5.2.3 Creation and Perfection for Intermediaries 201
8.5.2.4 Enforcement,Priorities 202
8.5.2.5 Attachment 203
8.6 Conflict of Laws 203
8.6.1 Introduction 203
8.6.2 Accountholder Interests 204
8.6.3 Security Interests 206
8.7 Conclusions 207
8.7.1 Questions and Answers 207
8.7.2 Coherence 212
Part Three Harmonisation and Modernisation 215
Chapter 9 Harmonisation Initiatives 217
9.1 Introduction 217
9.1.1 The Case for Harmonisation 217
9.1.2 Three Levels of Challenge 222
9.2 Global Harmonisation 224
9.2.1 Introduction 224
9.2.2 Recommendations 224
9.2.3 UNIDROIT Instrument on Substantive Law 227
9.2.4 Hague Convention on Private International Law 231
9.3 European Harmonisation 234
9.3.1 Introduction 234
9.3.2 Sector-Driven Harmonisation 234
9.3.3 Harmonisation of Financial Law 236
9.3.3.1 Settlement Finality Directive 237
9.3.3.2 Winding-Up Directive 239
9.3.3.3 Financial Collateral Directive 239
9.3.3.4 MiFID 240
9.3.3.5 Shareholders’Rights Directive 242
9.3.4 Harmonisation of Securities Custody and Transfer Law 243
9.3.4.1 Giovannini Group 2001 Report 243
9.3.4.2 Giovannini Group and EFMLG 2003 Reports 244
9.3.4.3 ESCB-CESR 2004 Report 246
9.3.4.4 Recent Developments 247
9.4 Conclusion 248
Chapter 10 National Securities Laws Compared and Evaluated 251
10.1 Introduction 251
10.2 Principles of Modernisation and Policy Perspectives 252
10.2.1 Introduction 252
10.2.2 Securities Infrastructure 254
10.2.2.1 Securities Eligible 254
10.2.2.2 Intermediaries Eligible 255
10.2.3 Characterisation of Accountholder Interests 256
10.2.4 Effects of a Credit Entry 258
10.2.4.1 Tracing 258
10.2.4.2 Evidence 260
10.2.5 Accountholder Protection Against the Intermediary 261
10.2.5.1 Illegal Disposal by Intermediaries 261
10.2.5.2 Right of Disposal 263
10.2.5.3 Double Bookkeeping 263
10.2.5.4 Segregation 265
10.2.5.5 Right of Retrieval 266
10.2.6 Intermediary Insolvency 267
10.2.6.1 Preservation of Accountholder Interests 268
10.2.6.2 Exception: Secured Creditors 269
10.2.6.3 Shortfalls 271
10.2.7 Corporate Action Processing 272
10.2.8 Securities Transfer 274
10.2.8.1 Finality 274
10.2.8.2 Negotiability 276
10.2.8.3 Causality 279
10.2.8.4 Consensualism 280
10.2.9 Security Interests 282
10.2.9.1 Creation 282
10.2.9.2 Enforcement, Right of Use 285
10.2.10 Upper-Tier Attachment 286
10.2.11 Conflict of Laws 287
10.2.11.1 Lex Situs 288
10.2.11.2 PRIMA 289
10.2.11.3 Party Autonomy 291
10.3 Conclusion 292
Chapter 11 Harmonisation and Coherence of National Laws 295
11.1 Introduction 295
11.2 Modernisation and Coherence Perspectives 297
11.2.1 Accountholder/Intermediary Relationship 297
11.2.2 Accountholder Interests 299
11.2.2.1 Principles of Property Law 299
11.2.2.2 Characteristics of Property Interests 302
11.2.3 Securities Transfer 305
11.2.3.1 Consensualism 305
11.2.3.2 Causality and Bona Fide Acquirer Protection 306
11.2.3.3 Conclusion 308
11.2.4 Security Interests 308
11.2.5 Intermediary Insolvency 311
11.2.6 Conflict of Laws 314
11.2.7 Clearing and Settlement Systems 315
11.3 Conclusion 317
Chapter 12 Towards the European Harmonisation of Securities Law 321
12.1 Introduction 321
12.2 Legal Basis 322
12.3 Scope and Interoperability 323
12.3.1 Introduction 323
12.3.2 Definitions 324
12.3.3 Characterisation 326
12.3.4 Accountholder Protection in Intermediary Insolvency 327
12.3.5 Corporate and Other Areas of Law 328
12.3.6 Uncovered Credits 331
12.3.7 Securities Transfers 331
12.4 Form 334
12.4.1 Introduction 334
12.4.2 European Uniform Securities Code 334
12.4.3 Directive, Regulation and Other Forms 336
12.5 Conclusion 338
Summary and Recommendations 341
Summaries in Dutch and French 351
Bibliography 371
Table of Cases 393
Table of Legislation 397
Index 407