Intermediated Securities Unidroit Draft Convention

CEU eTD Collection Hungary 1051 Central European University PROFESSOR: Tibor Tajti COURSE: L L.M. SHORTTHESIS Budapest, N UNIDROIT DRAFT CONVENTION AS A SOLUTION FOR

Secured Transactions ádor ut SLOVAKIAN SECURITIES LAW INTERMEDIATED SECURITIES

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Alexandra Horváthová

th , 2011

CEU eTD Collection holding system; Keywords: U with connected is securities intermediated system. legal Slovakian with Securities compatibility Intermediated regarding Rules Substantive on Convention impo global aims thesis this Moreover, their to due chosen been have jurisdictions with comparison in securities Slovakia. goal the is It arise. financial of system complex a through intermediaries transferred and held are Securities anymore. ho physically not do investors the Today, securities. issuing by typically achieved is this and capital raise to need issuers operations, business conduct to order In ABSTRACT NIDROIT

Convention is recommended. is Convention hs hss sess o vlae Slovakia evaluate to assesses thesis This eta scrte depository; securities central .

intermediary; securities; odn o itreitd securities. intermediated of holding te necneto o cptl akt proceeds markets capital of interconnection the s

of this thesis to thesis this of

adequate and effective, as it as effective, and adequate to

describe the most recent harmonizing instrument, the instrument, harmonizingrecent most the describe

the examine a o Gray and Germany of law

securities account;securities iet odn sse; moiiain indirect immobilization; system; holding direct

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n responds to the essential legal issues issues legal essential the to responds

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ecurities and holding and ecurities h Uie States United the tne and rtance ,

numerous legal issues issues legal numerous s

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CEU eTD Collection Iand my them,toL sincere wouldliketo toexpress thankfulness support. and love immense special my time, same the At wherein Rome Iwas to able treasure. and appreciate really I what students his in interest his showed truly and discussion of type any for was available always He CEU. the at time entire the during but period writing the during only not help and T Professor supervisor my to gratitude my express to like would I ACKNOWLEDGEMENTS

Yet, there are however two more people who alw who people more two however are there Yet, complete my research. gr

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I would like to thank the thank to like would I os o my to goes

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parents and sister for their their for sister and parents dia and Vladimír and dia ibor Tajti for his guidance his for Tajti ibor U NIDROIT ays stood by me me by stood ays library seated seated library . iii

CEU eTD Collection BIBLIOGRAPHY CONC 4. 3. 2. 1. INTRODUCTION ABBREVIATION LIST OF OF CONTENTS TABLE ACKNOWLEDGEMENTS ABSTRACT TABLE OF CONTENTS

1.2. 1.1. 4.4. 4.3. 4.2. 4.1. 3.3. 3.2. 3.1. 2.3. 2.2. 2.1. 1.5. 1.4. 1.3. LUSION 1.1.1. AND LEGAL EMERGENCE 4.4.1. 4.2.2. 4.2.1. 4.1.1. IN SITUATION CURRENT UNIDROIT 2.2.5. 2.2.4. 2.2.3. 2.2.2. 2.2.1. 2.1.5. 2.1.4. 2.1.3. 2.1.2. 2.1.1. OF GERMAN COMPARISON 1.5.2. 1.5.1. 1.4.1. 1.2.2. 1.2.1.

......

U G H S S K P G T T O EU L E L EGAL EGAL EGAL LOVAKIAN TRUCTURE OF THE HE HE MERGENCE OF EY URPOSE OF THE ERMANY V OLDING ERMANY OR THE NIDROIT THER THER

......

Sphere of Application of the of the Application of Sphere Transfer Securities of Investor and Intermediary Financial Between Relationship The S Intermediated Regulating Statutes US the in Transfer Securities of Intermedi Financial between Relationship The the US in System Holding 8 UCC Article States United the in securities intermediated regulating Statutes Investor Germany in and Intermediary Financial Between Relationship The Germany in System Holding Germany in Transfer Securities of Securities on Doctrine Legal German Germany in Securities Intermediated Regulating Statutes U Conventio Hague Intermediaries Investment on Regulation EU System Holding Indirect & System Holding Direct Dematerialization and of Immobilization Concept The Securities in Interests and Securities Between Distinction H

...... F L L

NIDROIT ARMONIZATION EATURES OF THE EGAL EGAL EGAL ...... CONVENTION N N I NTERNATIONAL ATURE OF ATURE OF S C

YSTEM YSTEM IN ...... N N S ONVENTION .

ECURITIES ATURE OFATURE OFATURE US

S Convention ......

...... I

NTERMEDIATED – U US

I S

NIDROIT WHICH CLOSERWHICH IS ...... NTERMEDIATED U ECURITIES S NIDROIT

– LOVAKIA U NITIATIVES SLOV ...... I I INTERMEDIA OF NATURE L ......

n H NTERMEDIATED NTERMEDIATED NIDROIT W – AW

...... ARMONIZATION S

& US REGULATION ON I ON USREGULATION & HICH HICH BETTERIS OLUTION FOR ......

...... C

......

AKIA AND THE APPLICA THE AKIA AND ...... ONVENTION

...... C

......

...... ONVENTION S C

...... ECURITIES ONVENTION S ...... ?

...... ECURITIES U

...... NIDROIT ......

S S ...... S

ECURITIES IN THE ECURITIES IN ? ...... E LOVAKIA

...... FFORTS

......

ecurities Slovakia in

...... Convention ......

...... ? ......

...... TED SECURITIES TED ...... G ...... NTERMEDIATED SECURIT NTERMEDIATED ......

ERMANY ...... BILITY OF UNIDROIT C OFUNIDROIT BILITY ary and Investor in the United States United Investor the in ary and U ...... NITED NITED ......

......

...... S ...... TATES

......

...... ONVENTION ...... IES ......

......

. 56 53 50 49 48 48 46 44 42 41 41 40 38 37 37 34 33 31 30 29 28 27 27 26 25 23 22 22 22 21 20 19 19 17 15 13 13 12 12 10 10 iv IV III V

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note 1 note

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supra supra - h pro ta mitis scrte acut o etteet odr i the in holders entitlement for account securities a maintains that person The 102 official cmt. 7 7 official cmt. 102

note 17 note 17 note

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74 intermediary.

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77 u generis sui

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H 8 UCC § 8 UCC § 8 UCC § 8 UCC § UCC § 8 § UCC exercise rights with respect to financi with respectexercise to rights Charles W. Mooney, Jr., Jr., Mooney, W. Charles AENTJENS Pursuant to Article 8, a financial intermediary is obliged to maintain financial assets financial maintain to obliged is intermediary financial a 8, Article to Pursuant n h cs o islec o a non a of insolvency of case the In investor the governs 8 Article UCC the However,

supra

note 12, at 12, note - mes.boj.or.jp>/lastly visited mes.boj.or.jp>/lastly iary or by terminating the indirect form of holding and obtaining the obtaining and holding of form indirect the terminating by or iary e of flexibility. For in For offlexibility. e d ealers against losses up to $ 500,000 ( 500,000 $ to up against losses ealers

78 Law and Systems for Intermediated Securities and Relationship of Private Private of Relationship and Securities Intermediated for Systems and Law

15 199. 85

(

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, Secondly, different set of rules and rules of set different Secondly, 79 15 U.S.C. § U.S.C. 78fff 15

conomic Studies, Bank of Japan Japan of Bank Studies, conomic R

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purchaser and the immunity from liability to an entitlement holder holder an entitlement to liability from immunity the and purchaser .

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supra

Both of these statutes have been built on the principle of negotiability, i.e. a i.e. negotiability, of principle the on built been have statutes these of Both . Hakes, Hakes, ,

661, 710 710 661, supra seller ies

note 78, at 16. at 78, note 86 , the principle of be, the negotiabilitywill introduced.

UCC Article 8: Will the Indirect Holding of Securities Survive the Light of Day? of Light the Survive Securities of Holding Indirect the Will 8: Article UCC note 12, at 211 at 12, note

and h (2002). as to transfer ( transfer to as

emday tee r n seil itiuinl ue apial to applicable rules distributional special no are there termediary,

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in the US .

89 ties transfers were governed by the Uniform Stock Stock Uniform the by governed were transfers ties s

to protect innocent purchasers of securities against the the against securities of purchasers innocent protect to nemo dat quod non habet non quod dat nemo Hence the same principle same the Hence

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curs in the indirect holding system, the the system, holding indirect the in curs nvoluntari see - 503(e) 87

Mooney, purchaser s a s

Prior to the enactment of the of enactment the to Prior

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supra supra

can only acquire the the acquire only can note 78, at 19. at 78, note purchaser in case in purchaser

bona

33 35

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ibed and briefly analyzed. Giving the limitation of scope of this thesis the the thesis this of scope of limitation the Giving analyzed. briefly and ibed

eitain f h transfere the of registration euiis account. securities

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note 17, at 17, note a euiis rnfr is transfer securities a , ‟ nm i te surs ok, r the or books, issuer‟s the in name e‟s

35 the moment a transferee obtains transferee a moment the - 36.

ypes of securities. securities. of ypes effective 93 e legal doctrine doctrine legal e

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i Micheler Luc d.

at Concerning the transfer of securities in both systems, both in securities of transfer the Concerning States United the system, ownership” “direct German the to comparison In Thévenoz, Thévenoz, 408 96 J.L. , .

supra This direct ownership of securities is viewed as well as the justification for the for justification the as well as viewed is securities of ownership direct This

B US Inte

. note 47, at 47, note

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rmediated Securities, Legal Risk, and the International Harmonization of Commercial Commercial of Harmonization International the and Risk, Legal Securities, rmediated F IN .

384

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r netet i te ae f intermediary‟ of case the in investments ir (2008) - ownership arises. ownership - possessors of the securities and one between the investor the between one and securities the of possessors 97

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together and the form of ownership is is ownership of form the and together Even in the case that the intermediary the that case the in Even - 98 netr, h investor the investors,

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border incompatibility. border ation which was established in 1926 as an auxiliary organ of the League of Nations. Today Today Nations. of League the of organ auxiliary an as 1926 in established was which ation José Angelo Estrella Faria, Faria, Estrella Angelo José UNIDROIT n 2002, In u t te at ta i ls dcds h patc o hlig n dsoiin of disposition and holding of practice the decades last in that fact, the to Due The Purpose of the

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Explanatory notesExplanatory Faria Herbert Kronke, Kronke, Herbert 104 -

of Global Clearing and Settlement Settlement and Clearing Global at However, h is plc ga o the of goal policy first The When Key Feature

, - U ha EU 629 Stud supra supra laws issues but there are there but issues laws e ue gvrig h idrc hlig system holding indirect the governing rules ve .

in in y Group y drafting a c a drafting note 101, note 5 mnzto efr poie ut einl ouin n teeoe their therefore and solution regional just provide effort rmonization

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supra supra

103

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the ates globally.

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and the relevant intermediary in their c their in intermediary relevant the and When analyzing the current legal diversity of intermediated securities, in particular particular in securities, intermediated of diversity legal current the analyzing When Concerning the harmonization efforts harmonization the Concerning has system legal Each

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