1 MODERN TRANSNATIONAL AND COMPARATIVE COMMERCIAL AND FINANCIAL LAW AND ITS SOURCES 1
PART Ⅰ NATIONAL AND TRANSNATIONAL OR INTERNATIONAL COMMERCIAL AND FINANCIAL LAW OR THE LAW CONCERNING PROFESSIONAL DEALINGS （THE NEW LEX MERCATORIA OR LAW MERCHANT） 1
1.1.Introduction 1
1.1.1 The Meaning of Modern International Commercial and Financial Law 1
1.1.2 The Antecedents of Modern Attitudes to International Commercial Law in Civil and Common Law.The Meaning and Impact of Statism， Legal Positivism and Legal Formalism 8
1.1.3 The Impact of Civil and Common Law Traditions on the Modern Transnational Law Merchant and its Formation.Flexibility and Legal Dynamism 15
1.1.4 Civil and Common Law Notions of Commercial Law 20
1.1.5 The Development of a Separate Commercial Law in France and Germany 25
1.1.6 Old and New Commercial and Financial Law： International Professional Law and the Revival of the International Law Merchant or Lex Mercatoria.Constraints Derived from the Continuing Domestic Nature of Bankruptcy Laws 28
1.1.7 International Commercial Arbitration and International Commercial Courts 35
1.1.8 Structure of this Chapter 39
1.2 The Origin and Evolution of Civil and Common Law.The Sources of Private Law.Statist and Non-statist View 41
1.2.1 The Evolution of Modern Private Law and its Sources and their Importance for the Development of Modern International Commercial and Financial Law 41
1.2.2 The Early Development of Roman Law 41
1.2.3 Classical Roman Law and the Corpus Iuris Civilis 45
1.2.4 The Revival of Roman law in Western Europe： The Ius Commune 48
1.2.5 The Ius Commune and Local Law 51
1.2.6 Natural Law、 and the Natural Law School： Grotius’ De lure Belli ac Pacis，its Approach and Impact 55
1.2.7Natural Law， Legal Principle and Positive Law： The Status of State Law in the Philosophies of Grotius， Hobbes， Locke， Kant and Hegel 62
1.2.8 The German Historical and Romantic Schools 64
1.2.9 The 19th-Centuty Civil Law Concept of National Codifications and the Role of Interpretation 67
1.2.10 20th-Century Continental European Legal Thinking in Private Law：Begriffs-and Interessenjurisprudenz.Modern Hermeneutics 71
1.2.11 Development of the Common Law.Equity 75
1.2.12 The Common Law Approach to Scholarship， Precedent， Legislation and Statutory Interpretation 79
1.2.13 Intellectualisation and Conceptualisation in Common Law.Modern American Academic Attitudes towards the Law and its Development：Legal Formalism and Realism.Post-realism or Legal Functionalism： The‘Law and…’ Movements 85
1.3 Civil and Common Law Compared.The Impact of Modern Regulatory and Mandatory Laws： Public Poli and Governmental Interests 96
1.3.1 The Relation between Statutory and Non-statutory Law in Civil and Common Law.Sources of Law： General Principles， Custom and Statutory Positivism 96
1.3.2 Legal Attitudes in Civil and Common Law： The Role of Interpretation and the Approach to Fact and Law-Finding 104
1.3.3 20th Century Government Intervention in Private Law.Government Policies， Regulation and Mandatory Domestic Rules.The Effect of Globalisation and the Denationalisation of Private Law 109
1.4 Cultural， Sociological and Economic Undercurrents in the Formation of the Law.Legal Orders and their Manifestation 115
1.4.1 The Concept of Legal Orders 115
1.4.2 Law as Cultural Phenomenon 117
1.4.3 Sociological and Economic Considerations in the Law. 125
1.4.4 The Competition between Transnational Law and Mandatory State Laws or National Public Policies 129
1.4.5 The International Commercial and Financial Legal Order and its Relevance： The Role of Legal Theory， Legal History and Comparative Law. 134
1.4.6 The Operation of Different Legal Orders： Evolution of a US Federal Commercial Law， of Transnational Private Law Concepts in the EU， and of International Human Rights Law in the Council of Europe （European Court of Human Rights） 139
1.5 Transnational Private Law among Professionals 142
1.5.1 The Guiding Function of International Commercial and Financial Law. The New Legal Order in the Professional Sphere.The Lex Mercatoria v Ius Commune Approach 142
1.5.2 Spontaneous Sources of Law： Fundamental and General Legal Principle. Custom. 148
1.5.3 Uniform Substantive Treaty Law as Alternative to Private International Law. 153
1.5.4 The Hierarchy of Norms in Modern International Commercial and Financial Law： The Role of Fundamental and General Principles， of Custom， Uniform Treaty Law， Comparative Domestic Law， and Private International Law、 Completeness of the Lex Mercatoria. 157
1.5.5 Mandatory Rules of Domestic Public or Regulatory Law and the Lex Mercatoria. 161
1.5.6 Agents of International Convergence and Harmonisation： The Role of UNIDROIT， UNCITRAL， the ICC， The Hague Conference， the EU， and the American Law Institute and Commissioners on Uniform State Laws in the USA； The Impact of the International Legal Practice and Scholarship. 161
1.5.7 The Role of National Courts and of International Commercial Arbitration. 166
PART Ⅱ THE NATURE， STATUS AND FUNCTION OF PRIVATE INTERNATIONAL Law. 168
2.1 Modern Private International Law. 168
2.1.1 The Underlying Concept of Modern Private International Law.The Role of Party Autonomy. 168
2.1.2 Earlier Approaches， Drawbacks of the Modern Conflict Rules. 172
2.2 The Modern European and US Approaches to Conflicts of Laws. 178
2.2.1 Reveinement of the European Model. 178
2.2.2 Developments in the USA. 179
2.2.3 The Various Modern US Conflict Theories. 182
2.2.4 The European Approach of Exception Clauses： Reasonable and Fair Solutions in the Dutch Proposals. 184
2.2.5 Emphasis on the Facts rather than on the Rules： The Nature of the Relationship and of the Transaction.Modern Interpretation Techniques and the Effects of Internationalisation. 187
2.2.6 The Issue of Public Policy or Governmental Interests and its Impact. The Notion of Comity and its Application.Competition between Transnational and State Laws Revisited. 190
2.2.7 States as Counterparties. 193
2.2.8 Practical Issues Concerning Conflicting Public Policies： Effect on the Lex Mercatoria and the Importance of the Notion of Forum non Conveniens. 196
2.2.9 Party Autonomy and Contractual Choice of Law. 201
2.3 Interaction of Private International Law and Uniform Law. 205
2.3.1 Private International Law and the Application of Uniform Law. 205
2.3.2 The Situation with Regard to EU Directives of a Private Law Nature. 205
PART Ⅲ THE DEVELOPMENT OF TRANSNATIONAL OR INTERNATIONAL COMMERCIAL AND FINANCE Law. 209
3.1 The Lex Mercatoria， Interrelation with Private International Law. 209
3.1.1 The Background to the Revival of the Lex Mercatoria 209
3.1.2 The Concept of the Modern Lex Mercatoria as a Hierarchy of Norms 211
3.1.3 The Major Protagonists of the Lex Mercatoria and Their Views：Legitimation 217
3.2 The Hierarchy of Norms： Elaboration 219
3.2.1 Fundamental Legal Principle.Transnational Rules of Contract Formation and the Normative Interpretation Technique.Procedure 219
3.2.2 Fundamental Principles.The Notion of Transnational Ownership.A Fractured System of Proprietary Rights 222
3.2.3 Mandatory Customs and Practices 228
3.2.4 Mandatory Uniform Treaty Law， Contractual Provisions （Party Autonomy）， Directory Trade Practices， Directory Uniform Treaty Law and Common or General Legal Principles 231
3.2.5 Domestic Laws， Private International Law： Mandatory Provisions and Public Policy or Regulatory Issues 235
3.3 Operation of the Lex Mercatoria and Objections to it 237
3.3.1 Operation of the Lex Mercatoria 237
3.3.2 Direct References to the Lex Mercatoria 239
3.3.3 Parties’ Choice of a Domestic Law v the Lex Mercatoria 241
3.3.4 Objections to the Lex Mercatoria Approach 242
3.3.5 Application and Enforcement of the Lex Mercatoria 244
2 DOMESTIC CONTRACT LAWS， UNIFORM INTERNATIONAL CONTRACT LAW AND TRANSNATIONAL CONTRACT LAW PRINCIPLES， INTERNATIONAL SALES AND CONTRACTUAL AGENCY 245
PART I DOMESTIC CONTRACT LAWS 245
1.1 Introduction 245
1.1.1 Modern Contract Law： Emphasis on Nature of the Parties or on Type of Contract？ 245
1.1.2 Modern Contract Theory 249
1.1.3 The Challenge of E-Commerce 254
1.2 Formation and Interpretation or Construction of Contracts in Civil and Common Law. 255
1.2.1 The Role of Parties’ Intent in Civil Law.The Normative or Teleological Interpretation Method.The Common Law Approach Compared 255
1.2.2 The Civil Law Notion of Good Faith and its Modern Use in Interpretation 262
1.2.3 Consensus in Civil Law and its Normative Interpretation： Alternative Views. 266
1.2.4 Intent in Common Law： Offer and Acceptance， the Notions of Consideration， Exchange or Bargain. 269
1.2.5 The Practical Significance of the Consideration Requirement in Common Law. 273
1.2.6 Contracts： Construction and Remedies in Common Law.The Parole Evidence Rule. 275
1.2.7 The Common Law Notion of Consideration and the Civil Law Notion of Causa： International Aspects. 277
1.2.8 Custom and the Interpretation of Contracts. 281
1.2.9 Other Aspects of Contractual Validity： Capacity and Authority. 282
1.2.10 Other Aspects of Contractual Validity： Formalities. 282
1.2.11 Other Aspects of Contractual Validity： Definiteness. 283
1.3 The Civil Law Notion of Good Faith and the Common Law Alternatives of Implied Terms， Nature of the Relationship of the Parties， and Reliance. 284
1.3.1 The Notion of Good Faith in Civil Law. 284
1.3.2 Good Faith in Common Law.Alternatives.Equity and Fiduciary Duties Distinguished. 293
1.3.3 Good Faith in the UNIDROIT and European Contract Principles. 297
1.3.4 EU Notion of Good Faith. 298
1.3.5 The Lesser Need for Legal Refinement in the Professional Sphere：Interpretation， Mistake， Gross Disparity and Disclosure Duties. 299
1.3.6 The Status of Commercial Letters of Intent. 300
1.3.7 Pre-contractual Negotiation and Post-contractual Implementation Duties of Professionals： Abuse of Rights. 301
1.3.8 Force Majeure， Re-negotiation Duties and Hardship Adjustments in Professional Relationships. 303
1.4 Performance of the Contract， Defenses， Default and Excuses， Termination. 304
1.4.1 Performance in Kind/ Specific Performance. 304
1.4.2 Lack of Consensus or Defenses to Performance： Invalidity and Rescission. 307
1.4.3 Excuses and the Meaning of Promises， Conditions and Warranties in Connection with Performance in Common Law.Conditions， Representations/ Warranties and Covenants in Financial Contracts. 311
1.4.4 Default or Breach and Damages. 314
1.4.5 Force Majeure and Change of Circumstance.Excuses and Allocation of Risk in Sales. 316
1.4.6 The Definition of the Concept of Force Majeure.Frustration and Economic Impossibility.Development in Civil and Common Law. 319
1.4.7 Unforeseen Circumstances and the Balance of the Contract： Hardship and Renegotiation Duties. 322
1.4.8 Modern Legislative Approaches to a Change in Circumstances：Contractual Hardship Clauses. 326
1.5 Privity of Contract. 328
1.5.1 Privity of Contract or Third Party Rights and Duties under a Contract. 328
1.5.2 Development of Contractual Third-Party Rights and Duties in Civil Law. 334
1.5.3 The Situation in Common Law and the Changes in the USA and England. 336
1.6 The UNIDROIT and European Principles of Contract Law： Vienna Convention and UCC Compared. 339
1.6.1 The Applicability， Reach， and the Directory or Mandatory Nature of the Principles. 339
1.6.2 Approach to Contract Formation： Capacity， Formalities and Specificity. 347
1.6.3 Notions of Good Faith and Reasonableness： Interpretation and Supplementation of the Principles and Contracts thereunder.Force Majeure and Hardship. 350
1.6.4 The Impact of Custom. 355
1.6.5 Consensus and its Failure： Defenses and the Question of Continued Validity. 356
1.6.6 Performance， Default and Force Majeure Excuses： Hardship. 357
1.6.7 Privity of Contract. 358
1.6.8 The Nature and Impact of the Principles. 358
1.7 Directory and Mandatory Rules of Contract 361
1.7.1 Directory and Mandatory Contract Rules in Domestic Laws. 361
1.7.2 Treatment of Directory and Mandatory Contract Rules in Private International Law. 363
1.7.3 Mandatory Uniform International Contract Rules. 365
1.7.4 The Effect of the Freedom of Movement and the Freedom of Establishment on the Application of Domestic Mandatory Rules. 365
PART Ⅱ CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS 366
2.1 The Main Aspects of the International Sale of Goods. 366
2.1.1 Introduction. 366
2.1.2 The Minimum Requirements of the Sales Agreement： Special Features and Risks of International Sales. 368
2.1.3 Legal Risk in International Sales. 370
2.1.4 Special Arrangements to Cover the Risks of International Sales. 373
2.1.5 International Sales as Contracts between Professionals： Applicable Law. 374
2.1.6 Currency and Payments in International Sales： Free Convertibility and Transferability of Money. 377
2.1.7 The Transfer of Title in International Sales. 378
2.1.8 Conform Delivery and the Passing of Risk in International Sales. 379
2.1.9 The Passing ofRisk in Civil and Common Law. 382
2.1.10 Proprietary Sales Price Protection in Civil and Common Law. 387
2.2 Ancillary Arrangements in International Sales.The Role of Intermediaries and Documents. 394
2.2.1 The Safe Harbour Function： Agents and Documents of Title. 394
2.2.2 The Use of Agents： Their Position. 395
2.2.3 The Use of Negotiable Documents of Title： Bills of Lading and Warehouse Receipts. 396
2.2.4 Documents of Title in Payment Schemes： Bills of Lading. 397
2.2.5 The Use of Negotiable Instruments： Bills of Exchange. 398
2.3 The Uniform International Sales Laws. 400
2.3.1 Origin and Scope 400
2.3.2 The System of the Vienna Convention： Directory or Mandatory Rules. 404
2.3.3 Applicability of the Vienna Convention. 405
2.3.4 The Sales Law of the Vienna Convention.Remedies. 406
2.3.5 Supplementation and Interpretation of the Vienna Convention. 411
2.3.6 The Interpretation of International Sales Contracts under the Vienna Convention： Meaning of Conduct and Custom in Terms of Contract Interpretation. 416
2.3.7 Supplementation of the Vienna Convention： Private International Law and the Rome Convention on the Law Applicable to Contractual Obligations. 418
2.3.8 The Main Rules of the 1980 EU Rome Convention on the Law Applicable to Contractual Obligations. 420
2.3.9 The Vienna Convention and the Different Trade Terms in International Sales. 424
2.3.10 Incoterms， Their Status and Relation to the UCC and Vienna Convention. 427
2.3.11 The Vienna Convention and the ICC Model International Sales Contract.The 2004 Principles of European Law： Sales. 429
2.4 The Law Merchant Concerning International Sales. 429
PART Ⅲ CONTRACTUAL AGENCY 430
3.1 The General Notion of Agency. 430
3.1.1 The Use of Agents： Their Position. 430
3.1.2 The Role of the Agent： Explicit and Apparent Authority. 434
3.1.3 The Notion of Independence， Apparent Authority and Agencies of Necessity. 437
3.1.4 The Consequences of Agency： Conflicts of Interests， Rights and Duties of the Agent. 439
3.1.5 Undisclosed and Indirect Agencies. 441
3.1.6 The Civil Law Indirect Agency.The Relationship between Principal and Third Party.Customers’ Assets. 442
3.1.7 The Economic Importance of Modern Agency. 446
3.2 International Aspects of Agency. 447
3.2.1 Private International Law Aspects of Agency. 447
3.2.2 Treaty Law Concerning the Law Applicable to Agency. 449
3.2.3 The Lex Mercatoria and Agency. 451
3.2.4 The EU Commercial Agent Directive. 451
3 INTERNATIONAL PAYMENTS， PAYMENT SYSTEMS AND MISTAKEN PAYMENTS 454
PART Ⅰ THE NOTION AND MODALITIES OF PAYMENT 454
1.1 Payment and Ways and Means of Payment. 454
1.1.1 What is Payment？ 454
1.1.2 The Notion of Money as Unit of Account or Unit of Payment： Money as Store of Value. 459
1.1.3 Paper Currencies and Modern Currency Election Clauses. 460
1.1.4 Freely Convertible and Transferable Currency. 462
1.1.5 The Different Ways and Means of Payment： Pull and Push Systems 464
1.1.6 Cash Payments and the Bank Transfer Option in Commerce and Finance. 465
1.2 Payment through Bank Transfers. 467
1.2.1 The Nature of Bank Accounts， the Current Account and its use in the Payment Circuit. 467
1.2.2 When is a Bank Payment Made？ The Nature of the Payment Instruction and Question of Acceptance and the Liberating Effect of the Payment. 469
1.2.3 The Legal Characterisation of Bank Transfer Payments： Assignment， Novation or Independent Legal Status.Legal Tools Underpinning the Notion of Finality. 473
1.2.4 Payment Mistakes and Restitution. 476
1.2.5 Modern Electronic Payment Systems.Clearing， Fedwire， CHIPS，CHAPS， Gross and Net Payment Systems and International Bank Transfers （SWIFT）. 478
1.2.6 The Risks in Modern Payment Systems 481
1.2.7 The EU Settlement Finality Directive. 482
1.3 Set-off as Method of Payment： Netting. 483
1.3.1 Legal Nature and Characterisation. 483
1.3.2 Eligibility. 485
1.3.3 Contractual Adaptations of the Set-off Settlement， Novation and Close-out Netting. 487
1.3.4 Use of Contractual Netting Clauses： Contractual Netting and Bankruptcy. 491
1.3.5 The ISDA Swap and Derivatives Master Agreements.Swap and Repo Netting.The Notion of Conditionality and ‘Flawed Assets’ as an Alternative to the Set-off.The EU Collateral Directive. 494
1.3.6 The Evolution of the Set-off Principle. 496
PART Ⅱ INTERNATIONAL PAYMENTS 499
2.1 International Payment Arrangements to Minimise Payment Risk 499
2.1.1 Cross-Border Payments and their Risks. 499
2.1.2 Payment in Open Account.Re-establishing Simultaneity through the use of Intermediaries. 501
2.1.3 Ways to Reduce Payment Risk. 502
2.1.4 Ways to Reduce Payment Risk： The Accepted Bill of Exchange. 503
2.1.5 Ways to Reduce Payment Risk： Collection Arrangements. 504
2.1.6 Ways to Reduce Payment Risk： Letters of Credit.The Dillerent Banks Involved. 506
2.1.7 The Types of Letters of Credit. 510
2.1.8 The Documents Required under a Documentary Letter of Credit. 511
2.1.9 The Right of Reimbursement of the Issuing Bank under a Letter of Credit. 512
2.1.10 The Letter of Credit as Independent and Primary Obligation： Legal Nature of Letters of Credit.The ‘Pay First， Argue Later’ Notion. 513
2.1.11 Non-performance under Letters of Credit： The Exception of ‘Fraud’. 516
2.1.12 Transferable Letters of Credit and Back-to-Back Letters of Credit. 517
2.1.13 Ways to Reduce Payment Risks： Autonomous Guarantees.Examples. Standby Letters of Credit. 518
2.1.14 The Law and/or Rules Applicable to Collections， Letters of Credit and Bank Guarantees.The ICC Rules and their Status.The Lex Mercatoria. 520
1.2.15 The UNCITRAL Convention on International Guarantees and the World Bank Standard Conditions. 521
2.2 International Set-offs. 522
2.2.1 The Law Applicable to Set-offs and Contractual Netting. 522
2.2.2 The Law Applicable to Netting and Swap Transfers 524
PART Ⅲ MONEY LAUNDERING 526
3.1 Techniques and Remedies. 526
3.1.1 Objectives and Mechanisms. 526
3.1.2 Why Action？ Remedies and the Objectives of Combating Money Laundering. 528
3.2 International Action. 529
3.2.1 The Group of Ten， the Council of Europe， and the United Nations. 529
3.2.2 The EU 529
4 OWNERSHIP， POSSESSION AND LIMITED， FUTURE， CONDITIONAL OR TEMPORARY LEGAL OR EQUITABLE PROPRIETARY RIGHTS CHATTELS AND INTANGIBLES 531
PART I LAWS OF MOVEABLE PROPERTY （CHATTELS AND INTANGIBLE ASSETS） 531
1.1 Introduction 531
1.1.1 Proprietary Laws in Common and Civil Law 531
1.1.2 Types of Assets. 535
1.1.3 The Requirement of Economic Value and Commerciability.Notions of Identity， Specitycity and Definiteness and their Inherent Constraints. 538
1.1.4.Nature of Proprietary Rights. 542
1.1.5 Importance of the Law of Chattels and Intangibles in Civil and Common Law.The Traditional Physical and Anthropomorphic Approach to Property Rights.Modern Developments. 545
1.1.6 The Effect of Financial Law and New Financial Structures. 549
1.2 The Types of Proprietary Rights in Civil Law. 552
1.2.1 The Nature and Limited Number of the Traditional Proprietary Rights in Civil Law： The Numerus Clausus Notion.The Role of Publicity， Actual Knowledge and Physical Possessions. 552
1.2.2 The Way Proprietary Rights are Expressed and Protected in Civil Law：The Notions of Ownership， Possession and Holdership or Detention；Constructive Possession and Holdership. 560
1.2.3 The Acquisitive Prescription and its Importance in Civil Law. Difference with the Protection of Bona Fide Purchasers. 564
1.2.4 Proprietary Defenses in Bankruptcy. 566
1.2.5 The Civil Law Relativity or Priority Principle in Respect of Proprietary Rights： The Difference with the Relativity of Obligatory Rights. 569
1.3 The Types of Proprietary Rights in Common Law： The Practicalry Differences with Civil Law.Modem Functional Theories. 570
1.3.1 Legal and Equitable Interests in Chattels. 570
1.3.2 Ownership and Possession of Chattels in Common Law. 573
1.3.3 Equitable Proprietary Interests in Chattels. 575
1.3.4 The Common Law System of Proprietary Defenses： Tort Actions Based on Better Rather Than Absolute Rights. 577
1.3.5 Constructive Possession in Common Law.The Absence of Acquisitive Prescription.Statutes of Limitation. 579
1.3.6 Practical Differences between the Common and Civil Law Approaches to Proprietary Rights in Chattels. 580
1.3.7 Approximation of the Common and Civil Law Systems of Proprieta Law in Chattels.User， Enjoyment and Income Rights.The Unifying Impact of Modern Financial Structures and the Requirements of Modern Risk Management.The Need for and Effect of Legal Transnationalisation. 582
1.3.8 Virtues and Pitfalls of the Numerus Clausus Notion.Modern Functional Analyses. 586
1.4 Transfer of Proprietary Rights in Chattels in Civil and Common Law. 590
1.4.1 The Legal Requirements for the Transfer of Chattels. 590
1.4.2 The Formalities of a Sale： Contract or Delivery （Physically or Constructively）； Double Sales， The Real or Proprietary Agreement in Civil Law. 592
1.4.3 The Importance of Identification.Effect on the Transfer.Sales of Future Assets， Bulk Transfers， and De Facto Transfers of Title. 595
1.4.4 The Development of the Rules Concerning Delivery as a Formal Requirement of Title Transfer in Civil and Common Law. 598
1.4.5 Legal Capacity and Disposition Right.Causes of Contractual Invalidity. Effect on the Title Transfer.Future， Conditional and Temporary Sales. 600
1.4.6 The Transfer Agreement： The Abstract and Causal System of Ownership Transfer.The Finality Issue. 603
1.4.7 The Origin of the Abstract and Causal Views of Title Transfer. 608
1.4.8 Disposition Rights： The ‘Nemo Dat’ Rule and the Protection of Bona Fide Purchasers. 613
1.4.9 Origin of the ‘Nemo Dat’ Rule and of the Principle of Bona Fide Purchaser Protection. 615
1.4.10 The Retention Right of the Seller in the Case of Default of the Buyer. 620
1.5 Proprietary Rights in Intangible Assets in Civil and Common Law. 624
1.5.1 Proprietary Rights in Intangible Assets and the Possibility and Method of their Transfer.The Meaning of Notification and the Situation in Double Assignments.The Civil Law Development. 624
1.5.2 The Development in Common Law. 630
1.5.3 The Transferability of Claims and Contracts.Assignment of Rights and Delegation of Duties.The Debtor’s Defenses and the Impact of Contractual Restrictions on the Transfer. 633
1.5.4 The Assignability of Future Claims. 639
1.5.5 Assignment， Novation， Amendment， Subrogation and Subcontracting. 642
1.5.6 Different Types and Objectives of Assignments. 644
1.5.7 The Better Right of the Assignee.The Notion of Abstraction， Independence and Finality.Comparison with Negotiable Instruments. 647
1.5.8 The Notion of Abstraction or Independence and the Liberating Effect of Payment by the Debtor. 650
1.5.9 The Ranking between Assignees， The Nemo Dat Rule in Assignments. 652
1.5.10 Contractual and Proprietary Aspects of Assignments.Mandatory Rules.Applicable Law and Party Autonomy. 654
1.5.11 Special Assignment Issues： Warranties， Conditions and Default. 656
1.5.12 Bankruptcy Aspects of Assignments.Recourse and Non-Recourse Financing. 657
1.5.13 Uniform Rules Concerning Assignments. 660
1.6 Trusts， Constructive and Resulting Trusts， Tracking and Tracing.Agency. The Civil Law Response. 661
1.6.1 Basic Features of the Common Law of Trust. 661
1.6.2 The Practical Significance of Trusts in Common Law Countries. 667
1.6.3 Constructive Trusts， Tracing and Tracking， Resulting Trusts， Statutory Trusts and Charitable Trusts. 668
1.6.4 Trust and Agency； Trust and Bailment. 670
1.6.5 Related Civil Law Structures. 671
1.6.6 Private International Treaty Law and Trust Law Principles. 673
1.7 Secured Transactions and Conditional Sales.Floating Charges. 675
1.7.1 The Importance of Conditional Sales in Finance and the Difference with Secured Transactions. 675
1.7.2 What are Sale-Repurchase Agreements or Finance Sales？ The Characterisation Issue.Property-based and Security-based Funding 676
1.7.3 The Evolution of Conditional and Temporary Transfers in Civil and Common Law. 679
1.7.4 When are Finance Sales Converted into Secured Transactions？ 681
1.7.5 The Operation of Finance Sales.Effect of the Conditionality of the Transfer.Proprietary Effect of Conditions.Duality of Ownership and of Possession in Civil Law.Openness of Proprietary Systems？ 686
1.7.6 Examples of Finance Sales： Finance Leases， Repos and Factoring. Finance Sales as Executory Contracts， Cherry Picking and Netting. 688
1.7.7 The Outward Signs of Security Interests and Ownership-Based Funding. Possession or Filing.Attachment and Perfection of Security Interests under the UCC. 691
1.7.8 Floating Charges in Common and Civil Law.Extended Reservations of Title.The Concepts of Bulk Transfers， Asset Substitution and Tracing and the Inclusion of Future Assets.The Facility to Sell Goods Free and Clear. 697
1.7.9 Uniform Security Law and Principles of Security Laws. 699
1.8 Private International Law Aspects of Chattels. 699
1.8.1 When Conflicts Arise. 699
1.8.2 The Application of the Lex Situs. 701
1.8.3 The Notions of Equivalence and Adaptation； Conditional Ownership，Security and Retention Rights. 705
1.8.4 Trusts： The 1985 Hague Convention on the Law Applicable to Trusts and Their Recognition. 707
1.8.5 Uniform Laws Concerning the Proprietary Aspects of Chattels. 712
1.8.6 The Lex Mercatoria Concerning Chattels. 712
1.9 Private International Law Aspects of Assignments. 713
1.9.1 The Various Aspects of Assignments.Characterisation Issues. Mandatory Proprietary Laws. 713
1.9.2 Current Approaches to Choice of Laws Issues in Assignments： The Legal Situs of Debts. 717
1.9.3 Treaty Law Approaches to the Law Applicable to Assignments： The Choice of Law Provision of Article 12 of the Rome Convention and the Draft UNCITRAL Receivable Financing Convention.New Proposals in Rome Ⅰ. 722
1.9.4 Uniform Law Concerning Proprietary Rights in Intangibles. 725
1.9.5 The Lex Mercatoria Concerning Bulk Assignments. 725
1.10 The Modern Law of Chattels and Intangibles. 726
1.10.1 Traditional and New Approaches. 726
1.10.2 Transnational Proprietary Rights Promoted by International Finance. 730
1.10.3 Paucity of Modern Property Theory. 734
PART Ⅱ NEGOTIABLE DOCUMENTS OF TITLE AND NEGOTIABLE INSTRUMENTS. 742
2.1 The Role of Documents. 742
2.1.1 Bills of Lading and Warehouse Receipts. 742
2.1.2 The Origin and Nature of the Bill of Lading and its Operation in the Proprietary Aspects of the Transfer of Goods. 747
2.1.3 The Status of the Bill of Lading in Legal Systems that Require Delivery for Title Transfer.Abstraction and the Conclusive Evidence Rule.The Situation in Germany and the Netherlands. 749
2.1.4 The Status of the Bill of Lading in Legal Systems that do not normally equire Delivery for Title Transfer： The Situation in France. 751
2.1.5 Bills of Lading as Quasi-Negotiable Instruments in the UK； The Situation in the USA. 751
2.1.6 Consequences of the Different Attitudes to Documents of Title when Goods are Transferred to Transferees Other than through a Transfer of the Bill of Lading. 753
2.1.7 The Transfer of Risk. 754
2.1.8 The Named or Straight Bill of Lading and Sea-way Bills. 754
2.1.9 Private International Law Aspects of Bills of Lading. 755
2.1.10 Lex Mercatoria and Uniform Treaty Law Concerning Bills of Lading. The Hague， Hague-Visby， and Hamburg Rules. 757
2.2 Negotiable Instruments. 759
2.2.1 Bills of Exchange. 759
2.2.2 Acceptance and Discounting of Time Drafts. 762
2.2.3 The Persons Liable under a Bill of Exchange： Recourse. 763
2.2.4 The Principle of Independence or Abstraction. 764
2.2.5 The Holder in Due Course.Personal and Real Defenses.Other Types of Holders. 765
2.2.6 Cheques. 766
2.2.7 Modern Use of Bills of Exchange and Cheques. 766
2.2.8 Bills of Exchange and Competing Assignments of the Underlying Claim. 767
2.2.9 Position of the Holder in Due Course of a Bill of Exchange Compared to the Bona Fide Holder of a Bill of Lading. 768
2.2.10 Foreign Bills of Exchange： Private International Law Aspects. 768
2.2.11 Uniform Treaty Law. 771
2.2.12 The Lex Mercatoria Concerning Bills of Exchange. 772
2.3 The Dematerialisation of Documents of Title and Negotiable Instruments； Electronic Transfers. 773
2.3.1 The Traditional Use of Documents of Title and Negotiable Instruments. Their Inconveniences and Risks.Seaway Bills and Indemnities. 773
2.3.2 Electronic Systems and Their Importance in Replacing Transportation Documents.The CMI Rules and Bolero.Use of Central CounterParties？. 776
2.3.3 The Situation with Regard to Bills of Exchange： Electronic Bank Transfers.The Facility of Global Trade. 779
PART Ⅲ INVESTMENT SECURITIES. 780
3.1 The Different Types of Shares and Bonds. 780
3.1.1 Traditional Distinctions.Negotiable Instruments and Transferable Securities.Dematerialisation and Immobilisation.Securities Entitlements. 780
3.1.2 Negotiability and Transferability of Investment Securities： Use of Securities Entitlements to Enhance Transferability and Liquidity. 787
3.1.3 The Risk Factors in the Holding and Transfer of Investment Securities：Bankruptcy Issues and Risk Reduction Techniques.The EU Settlement Finality Directive. 790
3.1.4 Modern Clearing and Settlement Systems： Internationalisation. 795
3.1.5 Book-Entry Systems for Shares and Bonds： Depository Receipts and The Earlier Developments towards Dematerialisation and Immobilisation. 797
3.1.6 The Legal Characterisation of Book-Entry Entitlements.The Manner and Consequences of their Transfer.Transfer Instructions and the Notion of Abstraction or Independence and Finality of the Transfer.The Concept of Bona Fide Transferee. 799
3.2 The Internationalisation of Custody and Settlement Systems and its Opportunities. 806
3.2.1 The Role of the Euromarket for Bonds and the Effect on International Share Trading.The Dominant Role of International Practices and the Bankruptcy Law Implications. 806
3.2.2 Law Applicable to Transactions in Investment Securities of the Book-entry Type. 811
3.2.3 The Lex Mercatoria concerning International Investment Securities Transactions. 817
3.2.4 Uniform Law： The EU Financial Collateral Directive.UNIDROIT project. 819
3.2.5.EU Activities in the Field of Clearing and Settlement 822
5 MODERN FINANCIAL PRODUCTS. 824
PART Ⅰ.SECURED TRANSACTIONS， FINANCE SALES， AND OTHER FINANCIAL PRODUCTS AND SERVICES. 824
1.1 Civil and Common Law Approaches. 824
1.1.1 Introduction 824
1.1.2 Financial Products in Commercial Banking Systems and Capital Markets. 826
1.1.3 The Evolution of Secured Transactions.Different Credit Cultures and the Role of Finance Sales.The Prevalence of Domestic Laws and the Issue of Legal Transnationalisation. 830
1.1.4 International Convergence in Secured Transactions and Finance Sales？ 834
1.1.5 The Problems of and need for Modern Non-possessory Security Interests in Personal Property and the Alternative use of Finance Sales. 836
1.1.6 Finance Sales and Secured Transactions Distinguished， the re-characterisation Issue.Different Risk and Reward Structures. 841
1.1.7 Formal International Harmonisation Attempts in the Area of Secured Transactions and Finance Sales.The EU Settlement Finality and Collateral Directives. 846
1.1.8 Notions of Segregation and Priority.Proprietary and Other Structures of Separation.Bankruptcy Consequences. 849
1.1.9 Party Autonomy and the Contractualisation or Unbundling of Proprietary Rights for Funding Purposes.Equitable Proprietary Rights. Closed or Open Systems of Proprietary Rights？ Bona Fide Purchasers and Bona Fide Creditors Protection.General Principles.The Effect of Contractual Netting Clauses. 854
1.1.10 Autonomous Transnational and Domestic Legal Developments. 857
1.1.11 Major Differences in Domestic Laws on Proprietary Financial Protection.Subordination and its Meaning.Uncertainty in International Financial Dealings. 860
1.1.12 The Impact of the Applicable Domestic Bankruptcy Regime in International Financial Transactions.The US Approach and the EU Bankruptcy Regulation. 864
1.2 The Situation in the Netherlands. 867
1.2.1 Introduction： The New Civil Code of 1992. 867
1.2.2 Security Substitutes and Floating Charges： The Reservation of Title. 869
1.2.3 Conditional and Temporary Ownership： The Lex Commissoria. 872
1.2.4 Open or Closed System of Proprietary Rights. 876
1.3 The Situation in France. 877
1.3.1 Introduction： The Vente a Remere and Lex Commissoria. 877
1.3.2 The Impact of the Notion of the ‘Solvabilite Apparente’. 879
1.3.3 The Modern Repurchase Agreement or ‘Pension Livree’. 880
1.3.4 The Reservation of Title. 882
1.3.5 Finance Sales.The Pension Livree.The Loi Dailly. 884
1.3.6.Titrisation （Fonds Communs de Creances） and the Transfer of Intangible Assets in Finance Schemes. 886
1.3.7 Open or Closed System of Proprietary Rights. 887
1.4 The Situation in Germany. 887
1.4.1 Introduction： The Development of the Reservation of Title and Conditional Transfers； Floating Charges. 887
1.4.2 Sicherungsubereignung and Conditional Sales. 892
1.4.3 Finance Sales. 895
1.4.4 Curbing Excess： Open or Closed System of Proprietary Rights. 896
1.5 The Situation in the UK 898
1.5.1 Introduction： Differences from Civil Law. 898
1.5.2 Basic Features of Conditional or Split Ownership Interests.Equitable and Floating Charges.Open System of Proprietary Rights. 900
1.5.3 The Distinction between Conditional Sales and Secured Transactions：Publication Requirements. 906
1.5.4 Reservation of Title. 910
1.5.5 Finance Sales. 911
1.6 The Situation in the USA. 913
1.6.1 Introduction： The Approach of Article 9 UCC and its Unitary Functional Approach towards Finance Sales. 913
1.6.2 The Unitary Functional Approach and Finance Sales： Problem Areas in Article 9 UCC. 916
1.6.3 Proprietary Characterisations. 921
PART Ⅱ FINANCIAL PRODUCTS AND FUNDING TECHNIQUES： MAJOR EXAMPLES OF SECURITY TRANSFERS AND FINANCE SALES.OTHER FINANCIAL STRUCTURES.INTERNATIONAL AND REGULATORY ASPECTS. 924
2.1 Finance Sales as Distinguished from Secured Transactions in Civil and Common Law： The Recharacterisation Risk. 924
2.1.1 Introduction. 924
2.1.2 The Practical Differences between Security- and Ownership-based Funding.The Re-characterisation Issue Revisited. 927
2.1.3 Legal Differences between Security- and Ownership-based Funding.The Early Operation of Split-Ownership Rights in the US. 929
2.1.4 Nature， Use and Transfers of Conditional and Temporary Ownership Rights.The Difference between them. 939
2.1.5 The Duality of Ownership in Finance Sales.The Impact of the Fungibility of Assets. 945
2.1.6.International Aspects： Private International Law Approaches to the Law Applicable to Proprietary Rights.Bankruptcy Effects. 948
2.1.7 International Aspects： Uniform Laws and Model Laws on Secured Transactions.The EBRD Effort. 951
2.1.8 International Aspects： The 2001 UNIDROIT Convention on International Interests in Mobile Equipment. 955
2.1.9 Domestic and International Regulatory Aspects. 956
2.1.10 Concluding Remarks.Transnationalisation. 957
2.2 Modern Security Interests： The Example of the Floating Charge 959
2.2.1 Types of Floating Charges or Liens.Problem Areas. 959
2.2.2.Different Approaches.Comparative Legal Analysis. 962
2.2.3 Modern Publication or Filing Requirements.Their Meaning and Defects.Ranking Issues. 966
2.2.4 Special Problems of Bulk Assignments. 968
2.2.5 International Aspects of Floating Charges.Limited Unification Attempts. 971
2.2.6 Domestic and International Regulatory Aspects. 972
2.2.7 Concluding Remarks.Transnationalisation. 973
2.3 Modern Finance Sales： The Example of the Finance Lease. 974
2.3.1 Rationale of Finance Leasing. 974
2.3.2 Legal Characterisation. 976
2.3.3 Comparative Legal Analysis. 979
2.3.4 International Aspects of Finance Leasing. 981
2.3.5Convention of 1988.Its Interpretation and Supplementation. 983
2.3.6 The Leasing Convention’s Sphere of Application， its Definition of Finance Leasing. 985
2.3.7 The Proprietary Aspects. 987
2.3.8 The Enforcement Aspects. 987
2.3.9 The Contractual Aspects. 988
2.3.10 The Collateral Rights. 990
2.3.11 Domestic and International Regulatory Aspects. 992
2.3.12 Concluding Remarks.Transnationalisation.The Mobile Equipment Convention. 992
2.4 Receivable Financing and Factoring.The 1988 UNIDROIT Factoring Convention and the 2001 UNCITRAL Convention on the Assignment of Receivables in International Trade. 994
2.4.1.Assignment of Monetary Claims in Receivable Financing and Factoring.The Issue of Liquidity. 994
2.4.2 Receivable Financing and Factoring： Origin and Different Approaches. 998
2.4.3 Factoring： The Contractual Aspects. 1001
2.4.4 Factoring： The Proprietary Aspects. 1002
2.4.5 International Aspects.The UNCITRAL and UNIDROIT Conventions. Internationality and Applicability. 1005
2.4.6 The UNCITRAL and UNIDROIT Conventions.Their Content， Field of Application， Interpretation and Supplementation.Their Role in the Lex Mercatoria Approach. 1009
2.4.7 Details of the UNIDROIT Factoring Convention. 1011
2.4.8 Details of the UNCITRAL Convention.Its Operational Insufficiency. 1014
2.4.9 Domestic and International Regulatory Aspects. 1016
2.4.10 Concluding Remarks.Transnationalisation. 1016
2.5 Asset Securitisation and Credit Derivatives. 1017
2.5.1 Asset Securitisation. 1017
2.5.2 Synthetic Securitisation.Credit Derivatives or Credit Swaps.The Total Return Swap and Credit Spread Options. 1021
2.5.3.Risks in Financial Engineering.The Enron Debacle. 1024
2.5.4 The Recharacterisation Risk in Securitisations. 1026
2.5.5 International Aspects. 1028
2.5.6 Domestic and International Regulatory Aspects. 1028
2.5.7 Concluding Remarks.Transnationalisation. 1029
2.6 Payments， Payment Systems， Money and Bank Accounts as Collateral. The Principles and Importance of Set-off and Netting. 1030
2.6.1 The Notion and Modes of Payment.The Need for Finality. 1030
2.6.2.Bank-Transfers and Payment Systems.Pull and Push Systems， Credit and Debit Transfers. 1033
2.6.3 The Legal Nature and Characterisation of Modern Bank Transfers.The Bank Account as a Sui Generis Right of the Account Holder. 1035
2.6.4 Clearing and Settlement of Payments in the Banking System. 1038
2.6.5 Set-off as a Form of Payment. 1041
2.6.6 The Expansion of Set-off through Contractual Netting Clauses.Their Special Importance in Clearing and Settlement and in Bankruptcy. 1044
2.6.7 International Aspects.EU Settlement and Collateral Directives. 1048
2.6.8 Domestic and International Regulatory Aspects of Netting in Particular 1048
2.6.9 Concluding Remarks.Transnationalisation. 1049
2.7 Investment Securities Entitlements and their Transfers （either Outright ， Conditionally or as Security）.Securities Shorting， Borrowing， and Repledging.Clearing and Settlement. 1049
2.7.1 Modern Investment Securities.Dematerialisation and Immobilisation. Book-entry Systems and the Legal Nature of Securities Entitlements. 1049
2.7.2 Securities Transfers： Tiered or Chained Transfer Systems.The Legal Character of the Securities Transfer and Its Finality. 1053
2.7.3 Securities Shorting， Securities Lending， Pledging and Repledging of Securities.The Notion of Rehypothecation. 1056
2.7.4 Modern Clearing and Settlement.Central Counter Parties （CCPs） and their Significance. 1060
2.7.5 International Aspects.EU Settlement Finality and Collateral Directives and the Hague Convention on the Law Applicable to Certain Rights in Respect of Securities held with an Intermediary. 1063
2.7.6 Regulatory Aspects. 1066
2.7.7 Concluding Remark.Transnationalisation. 1067
2.8 Investment Securities Repos. 1067
2.8.1 The Repurchase Agreement as a Prime Alternative to Secured Lending：Its Legal Characterisation.The Effect of the Right to On-sell the Securities 1067
2.8.2 The Development of the Repo in Fungible Investment Securities：Securities Lending and the Buy/Sell Back Transaction. 1072
2.8.3 Margining. 1074
2.8.4 The Netting Approach in Repos.Close-out Netting. 1075
2.8.5 The TBMA/ISMA Global Master Repurchase Agreement. 1075
2.8.6 International Aspects. 1077
2.8.7 Domestic and International Regulatory Aspects. 1078
2.8.8 Concluding Remarks.Transnationalisation. 1078
2.9 Derivatives， their Use and Transfers.The Operation of Derivatives Markets.Clearing and Settlement and the Function of Central Counter Parties （CCP’s）. 1078
2.9.1 Types of Financial Derivatives and their Operation. 1078
2.9.2 The Use of Derivatives.Hedging. 1080
2.9.3 The Valuation of Derivatives.Contracts for Differences. 1084
2.9.4 Derivatives Markets and their Operations.The Notion of Margin. 1085
2.9.5 The Concept of the Central Counterparty （CCP） and its Potential. 1089
2.9.6 Derivatives Risk and Netting for Swaps. 1091
2.9.7 Legal Aspects of Swaps.Integration and Conditionality， Acceleration and Close Out.The ISDA Swap Master Agreement. 1092
2.9.8 International Aspects. 1094
2.9.9 Domestic and International Regulatory Aspects. 1095
2.9.10 Concluding Remarks.Transnationalisation. 1095
6 FINANCIAL SERVICES， PRODUCTS， RISKS AND REGULATION. INTERNATIONALISATION， LIBERALISATION， AND RE-REGULATION. 1097
PART Ⅰ INTRODUCTION： FINANCIAL SERVICES ACTIVITIES， SERVICE PROVIDERS AND FINANCIAL REGULATION. 1097
1.1 Domestic and Cross-Border Financial Services.Regulatory Impact. 1097
1.1.1 Financial Services and Financial Regulation. 1097
1.1.2 The Recycling of Money.Banking and Capital Markets. 1098
1.1.3 Financial Intermediaries， their Operations and Regulation.Flows of Financial Services and Capital.Monetary Policies. 1099
1.1.4 The Basic Structure of Financial Regulation. 1102
1.1.5 The Objectives of Modern Financial Regulation. 1106
1.1.6 Regulatory Objectives and Moral Hazard.Statutory Regulatory Aims. 1112
1.1.7 Principle-Based Regulation. 1116
1.1.8 Offcial and Unofficial Financial Markets.The Functional Approach and Regulation of Participants rather than Markets. 1116
1.1.9 Universal Banks， Conglomerate Risks and Supervision. 1120
1.1.10 Market Abuse and Misleading Financial Structures 1122
1.1.11 International Aspects of Financial Regulation.When Are Financial Services International？ 1124
1.1.12 International Financial Regulation.The EU Model or Passport and Concept of the General Good. 1128
1.1.13 The International Capital Market and the EU Project for a Single European Market for Financial Services.A Single European Regulator？ 1130
1.1.14 The American Regulatory Approach to Issuing Activity and to Financial Services Rendered in the US by Foreign Issuers and Intermediaries. 1133
1.1.15 The Basle Concordat concerning International Banking Regulation and Consolidated Supervision.Efforts to Achieve a Framework for International Financial Conglomerate Supervision.The Joint Forum. 1137
1.1.16 The Modern International Financial Architecture.The Financial Stability Forum. 1140
1.2 The Essentials of the （Commercial） Banking Business and its Regulation. 1141
1.2.1 Major Aspects of Banking.Supervision and the Role of Banks of Last Resort. 1141
1.2.2 Types of Banks and their Operations. 1144
1.2.3 Commercial Banking Products， Unsecured and Secured Loans， Leasing，Repos and Receivable Financing， Syndicated Loans， Trade Finance and Project Finance. 1146
1.2.4 Commercial Banking Risks. 1149
1.2.5 Broad and Narrow Banking.Market Based Monitoring of Banks. 1152
1.2.6 Regulation and Banking Regulators.International Aspects. 1154
1.2.7 Intermediation and Desintermediation of Commercial Bank 1156
1.2.8 The Banking or Current Account Relationship and Agreement.A Public Function for Banks？ 1157
1.3 The Essentials of the Securities Business and its Regulation. 1163
1.3.1 Major Types of Securities.Negotiable Instruments， Transferable Securities and Investments.Book-entry Systems and Securities Entitlements. 1163
1.3.2 Securities Markets and their Organisation.Official Markets. 1168
1.3.3 Unoffcial Markets， Globalisation of Markets， Euromarkets. 1170
1.3.4 The Primary Market and Security Issuers.International Style Offerings. 1173
1.3.5 Secondary Market and its Trading Systems. 1173
1.3.6 Internet or Electronic Trading. 1175
1.3.7 Modern Clearing， Settlement and Custody. 1176
1.3.8 The Role of Investment Banks as Underwriters and Market Makers. 1179
1.3.9 The Role of Investment Banks as Brokers and Investment Managers. 1182
1.3.10 Insolvency of Securities Brokers.The Notion of Segregation， Tracing and Constructive Trust in Respect of Client Assets. 1184
1.3.11 Investment Funds or Collective Investment Schemes. 1188
1.3.12 Other Investment Banking Activities.Corporate Finance， Mergers and Acquisitions， Company Valuations. 1190
1.3.13 The Risks in the Securities Business.Securities Regulation and its Focus.The European and American Approaches. 1192
1.3.14 Securities Regulators. 1195
1.3.15 International Aspects of Securities Regulation. 1196
1.4 Modern Financial Products.Derivatives and Securitisations.Hedge Funds and Their Operations.Private Equity. 1198
1.4.1 Modern Developments in Financial Products. 1198
1.4.2 The Use of Derivatives.Hedging. 1200
1.4.3 The Valuation of Derivatives.Contracts for Differences. 1203
1.4.4 Derivatives Markets and their Operations.Clearing， the Operation of CCP’s and the Notion of Margin. 1205
1.4.5 Derivatives Risk， Netting and Regulation of Derivatives Activity. 1209
1.4.6 Legal Aspects of Swaps.Integration and Conditionality， Acceleration and Close Out.The ISDA Swap Master Agreement. 1210
1.4.7 Asset Securitisation.Legal Aspects and Risks. 1212
1.4.8 Synthetic Securitisation.Credit Derivatives or Credit Swaps. 1216
1.4.9 Securities Lending， Short Selling and Prime Brokerage. 1218
1.4.10 Hedge Funds and their Operation. 1219
1.4.11 Private Equity. 1219
PART Ⅱ INTERNATIONAL ASPECTS OF FINANCIAL SERVICES REGULATION； DEVELOPMENTS IN GATT， THE EU AND BIS/IOSCO/IAIS. 1220
2.1 Free Movement of Goods， Services， Current Payments and Capital after World War Ⅱ. 1220
2.1.1 Cross-border Movement of Goods.GATT. 1220
2.1.2 Cross-border Payments and Movement of Capital.IMF. 1222
2.1.3 Cross-border Movement of Services.GATS. 1223
2.1.4 The WTO. 1225
2.2 The Creation of the EEC and its Evolution into the EU. 1227
2.2.1 The Common Market and Monetary Union.The Various Pillars of the EU. 1227
2.2.2 The EU Institutional Framework and Legislation Instruments. 1232
2.2.3 Definition of Cross-border Services.Connection with Free Movement of Goods and Persons and with the Right of Establishment. 1234
2.2.4 Restrictions on the Basic Freedoms.Regulated Services and the General Good Concept. 1237
2.2.5 The Use of the Notion of the General Good in the EU. 1239
2.2.6 Early Failure of Full Harmonisation in Regulated Financial Services. 1241
2.3 Early EU Achievements in the Regulated Financial Service Industries. 1243
2.3.1 Banking. 1243
2.3.2 Details of the Early Banking Directives and Recommendations. 1243
2.3.3 Mortgage Credit. 1245
2.3.4 The Early Securities and Investments Recommendations and Directives. 1245
2.3.5 UCITS. 1248
2.4 The Globalisation of the Financial Markets and the Effect on the Liberalisation of Financial Services. 1249
2.4.1 Autonomy of the International Capital Markets. 1249
2.4.2 The Early Development of the Eurobond Market and its Main Features. Eurodeposits. 1249
2.4.3 Further Delocalisation， Competitive Deregulation.Situation in the USA. 1252
2.4.4 The Legal Status of Euromarket Instruments and Underwriting Practices. 1253
2.4.5 Central Bank Involvement. 1254
2.4.6 Effects of the Free Flow of Capital in the EU.The 1988 Directive on the Free Movement of Capital. 1254
2.4.7 The 1988 Directive and the Redirection of Savings and Tax Avoidance Issues.The 2003 Savings Tax Directive. 1255
2.4.8 The 1988 Directive and the Movement of Financial Products and Services. 1257
2.4.9 The 1988 Directive and Monetary and Exchange Rate Aspects of the Free Flow of Capital.The 1997 Stability Pact. 1258
2.4.10 The Single European Market for Financial Services and its Relationship to the Euromarkets. 1259
2.5 Developments in the BIS， IOSCO and IAIS.Capital Adequacy （Basel Ⅰ and Basel Ⅱ）. 1259
2.5.1 The Functions of the BIS， IOSCO and IAIS. 1259
2.5.2 The BIS Capital Adequacy Approach for Banks.The Basle I Accord. Criticism.Other Regulatory BIS Initiatives. 1261
2.5.3 Credit Risk， Position Risk and Settlement Risk Off-balance Sheet Exposures. 1263
2.5.4 The Risk Assets Ratios， Risk Weightings and Qualifying Capital under Basel I. 1264
2.5.5 1993 BIS Proposals for Netting， Market Risk and Interest Rate Risk.The 1996 Amendment. 1265
2.5.6 Criticisms.The Building Block Approach.Derivatives Risk. 1267
2.5.7 Capital Adequacy Calculations under Basel I.The Level Playing Field for Banks and the Effect of a Change in the Minimum Capital Requirement. 1269
2.5.8 The 1999 BIS Consultation Document and the 2001 BIS Proposals.Basel Ⅱ and the American Shadow Committee. 1272
2.5.9 Capital Adequacy Calculations under Basel Ⅱ. 1277
PART Ⅲ THE THIRD GENERATION OF EU DIRECTIVES COMPLETING THE INTERNAL MARKET IN FINANCIAL SERVICES AND THE 1998 EU ACTION PLAN FOR A SINGLE MARKET IN FINANCIAL SERVICES. 1282
3.1 The New EU Approach towards the Regulated Financial Services Industries following the Liberalisation of the Capital Flows in 1988. 1282
3.1.1 The Essence of the New Approach： Mutual Recognition of Home Country Rule.Limited Harmonisation.The European Passport. 1282
3.1.2 Cross-border Activities through an Establishment or through Direct Services.Different EU and US Approaches. 1284
3.1.3 Residual Host Country Rules， The Concept of the General Good and its Abuses. 1286
3.1.4 Division of Tasks.No Single EU Regulator.Regulatory Competition. 1290
3.1.5 Interaction with GATS. 1291
3.1.6 The EU Reciprocity Requirements.Relation with Third Countries. National Treatment and Effective Market Access. 1291
3.2 The Third Generation of EU Directives and the 1998 EU Action Plan for Financial Services. 1292
3.2.1 The Main Features. 1292
3.2.2 Lamfalussy Report and the Role of Comitology. 1296
3.2.3 SBD/CID： Home Country Rule Reach.Residual Host Country Powers. The Concept of the General Good. 1297
3.2.4 SBD/CID： Scope of the Banking Passport.Universal Banking. 1299
3.2.5 SBD/CID： Procedure for Obtaining the Passport.Home and Host Country Communications. 1299
3.2.6 ISD and MiFID： Basic Structure.Background and Scope. 1300
3.2.7 ISD/MiFID： Home Country Rule， Authorisation， Capital， Prudential Rules.Procedure for Obtaining the Passport.The Concept of the General Good Revisited. 1301
3.2.8 ISD/MiFID： Conduct of Business. 1302
3.2.9 ISD/MiFID： Regulated Markets， Concentration Principle and Stock Exchange Membership.The Competition of Modern Informal Markets. Best Execution. 1305
3.2.10 Clearing and Settlement. 1307
3.2.11 ISD/MiFID： Member States Committee. 1307
3.2.12 The 2003 Prospectus Directive （PD）.The Issuer’s Passport. 1307
3.2.13 The 2003 Transparency Obligation Directive（TD）. 1311
3.2.14 The EU Approach to Capital Adequacy. 1311
3.3 Other EU Regulatory Initiatives in the Financial Area. 1313
3.3.1 Large Exposures. 1313
3.3.2 Deposit Protection and Investor Compensation. 1313
3.3.3 Winding-up of Credit Institutions. 1313
3.3.4 Pension Funds. 1314
3.3.5 International Banking Supervision.Basle Concordat， EU Implementation， Conglomerate Supervision. 1315
3.3.6 Lead-regulator Concept.International Co-operation. 1316
3.3.7 The E-commerce Directive. 1316
3.3.8 Long-distance Selling of Financial Products to Consumers. 1317
3.3.9 The Take-over Bids Directive. 1318
3.3.10 The Market Abuse Directive. 1319
3.3.11 Other Parts of the Action Plan： Update UCITS， Electronic Money， Money Laundering， Cross-Border Use of Collateral， Taxation of Savings Income. 1319
3.3.12 Payment Services Directive. 1320
Index 1321