IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

A Uniform Choice of Law Rule for the Taking of Collateral Interests in Securities: Using Private Law Approaches to Reduce Credit and Legal Risk in Financial Systems

  • K Alexander
Registered author(s):

    Traditionally, securities were held, traded, and settled in direct holding systems in which owners of securities were either recorded on the issuer's register or were in physical possession of bearer securities certificates. Today, most-publicly traded securities are recorded electronically on the books of a financial intermediary, which in turn holds its interest in another intermediary and/or central securities depository. These multi-tiered structures are known as indirect holding systems, in which there are one or more tiers of intermediaries between issuer and investor, and interests in the underlying securities are recorded by book entries in fungible custody accounts at various levels in the chain. The transfer of such interests occurs by book entry without any form of actual or constructive delivery. Credit and liquidity risks arise in the cross-border context because there is uncertainty as to which legal system's rules apply to the disposition of collateral interests in securities. This legal uncertainty may lead to increased credit and liquidity risk. This paper analyses a recent Hague Conference Report that proposes a uniform conflict of law rule for determining which law should apply to the disposition of collateral interests in securities held in indirect holding systems. This paper argues that more legal uniformity across national systems is needed to devise common principles and rules for the creation, perfection, and protection of collateral interests in securities.

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below under "Related research" whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    Paper provided by ESRC Centre for Business Research in its series ESRC Centre for Business Research - Working Papers with number wp211.

    as
    in new window

    Length:
    Date of creation: Sep 2001
    Date of revision:
    Handle: RePEc:cbr:cbrwps:wp211
    Note: PRO-1
    Contact details of provider: Web page: http://www.cbr.cam.ac.uk/

    No references listed on IDEAS
    You can help add them by filling out this form.

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    When requesting a correction, please mention this item's handle: RePEc:cbr:cbrwps:wp211. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Howard Cobb)

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.