Conflicts Of Laws In Foreign Application Of US Securities Laws And Its Harmonization

The international community began to meditate on the unstability of the world currency system in the aftermath of the 2008 global financial crisis.Meanwhile,efforts to encourage cross-border use of the Renminbi(hereinafter RMB)picked up speed.In 2009,the People's Bank of China and other authorities have jointly formulated the Measures for the Administration of Pilot RMB Settlement in Cross-border Trade,allowing 365 eligible enterprises to settle their cross-border trade in RMB.In 2010,there are 67,724 pilot enterprises.When China made great progress in RMB Settlement in cross-border trade,the People's Bank of China has formulated the Administrative Measures for the Pilot RMB Settlement of Outward Direct Investment to assist in the pilot RMB settlement in cross-border trade and provide conveniences for banking financial institutions and domestic institutions to conduct the RMB settlement of outward direct investment.As for indirect inverstment,in addition to the Qualified Foreign Institutional Investors(hereinafter QFII),Qualified Domestic Institutional Investor(hereinafter QDII)and RMB Qualified Foreign Institutional Investors(hereinafter RQFII),China starts two more pilot programs of interconnection mechanism for financial transactions,which links the stock markets of Shanghai and Hong Kong and that of Shenzhen and Hongkong,allowing mainland investors to invest in stocks listed on the Stock Exchange of Hong Kong Limited and Hongkong inverstors to invest in stocks listed on the Shanghai Stock Exchange and Shenzhen Stock Exchange.In June 2017,China launched another pilot program which interconnect the bond markets of Hong Kong and mainland.The Shanghai-London Interconnection,Shanghai-Singapore Interconnection and QD?2 are studied by the authorities.In 2015,RMB joined the SDR basket as the fifth currency,which laid the foundation of the internationalization of Renminbi for it to become a reserve currency.Internationalization of RMB means it performs three functions-unit of account,medium of exchange,and store of value-in international trade,financial transaction and international reserve.Internationalization of Renmin and stock market are based on the laws,which can be demonstrated by the efforts and measures that China has taken.Among the laws and regulation,foreign application rules of securities laws is unquestionable the most important.Because the authorities administer the cross-border securities issuance and exchange pursuant to such rules while many securites are invoiced and settled in RMB.It's fair to say,foreign application rules of securities laws are closed related to RMB internationalization through Panda bonds and RMB offshore bonds.As a result,Standing Committee of the National People's Congress has been busy revising Securities Law of the People's Republic of China(hereinafter China's Securities Law)recently and passed the second draft on 23rd May,2017.It is inevitable to study the foreign application rules of American securities law for a researcher to study the same rules of China's Securities Law.On one hand,American securities laws play a key role when American securities market becomes the most important one in the world.Foreign companies go to America to issue,sell or buy securities,which is an encouragement for the U.S.Securities and Exchange Commission(hereinafter SEC)to improve and perfect the foreign application rules of securities laws.As a state of securities market,China can learn a lot from the American experiences.On the other hand,the developed securities market provides important support for dollar internationalization,which is highly dependant on the foreign application rules of American securities laws.As a state issuing international currency,China should attach enough importance to the relation between currency internationalization and foreign application rules of securities laws.This dissertation defines the foreign application,which means laws and regulations applies to the foreign persons and their actions within the territory of the state as well as the persons and their actions abroad when the specific conditions are met,which is composed of territorial application and extraterritorial application.When the U.S.applies its securities laws in such a way,conflicts of laws arise.The conflicts includ the ones within the American law system and the ones between American securities laws and foreign laws.The former conflicts can be classified as the ones between American securities laws and corporation law,the ones between American securities laws and case laws and the ones between different case laws.The latter conflicts exsit between the American securities laws and foreign corporation laws,foreign securities law and foreign bank secrecy laws.The America takes measures to reduce the conflicts of laws.As for the conflicts between American securities laws and corporation laws,federal governemt and SEC adopted new rules to lower the bar of secureties laws while the states improve the standards of corporate governance in corporation laws.When it comes to the other two categories of domestic law conflicts,the case law skills kicks in.That is to say,judges decide the case at hand in a way that turns the question of extraterritorial application into a question of territorial application,combines prescriptive jurisdiction and adjudicative jurisdiction,explains the presumption against extraterritoriality flexibly.There are two resolution for the America to harmonize the conflicts between American securities laws and foreign laws:unilateral and bilateral.Unilateral resolution means America revises its laws to exempt foreign issuers from some requirements of corporate governance and information disclosure or empower the SEC to cooperate with foreign regulators on a broader basis.Bilateral resolution means America cooperate with foreign regulators under dialogues,memorandums of understanding and treaties.As China are now making every effort to internalize its securities market and RMB,it's urgent and important for it to perfect the foreign application rules of securities laws.By doing so,China should comply with the following basic principles,namely,the principle of protecting invsetors,the principle of maintaining national financial security,the principle of unified legislation and the principle of international cooperation.To be specific,China should make make comprehensive rules for for the domestic companies who raise capital in foreign securities markets,adopt rules of corporate governance for the foreign issuers who come to China's securities markets raising capital as well as perfect the disclosure requirements and anti-fraud rules.Such measures will be system guarantee mechanism for the internationalization of Renminbi and securities market.Additonally,it's important for China to make good use of international cooperation mechanism to harmonize the conflicts of laws arising from the foreign application of China's securities laws and maintain the efficiency of administration in cross-border securities issurance and transaction.To achieve this goal,China should strengthen the role of memorandums of understanding,make more rules of international cooperation of securities regulation and make the best use of treaties.Only in this way can international cooperation be the guarrentee of foreign application of securities laws.