Research On The Rule Of "Place Of The Relevant Intermediary Approach" In Cross-border Securities Transactions

The rule of Place of the Relevant Intermediary Approach (PRIMA) is a new conflict rule of Private International Law in the field of cross-border securities transactions, which also becomes a difficult and hot-button issue in academics. Since the 1980s, the indirect holding system of securities has experienced rapid development due to its quickness and convenience, though lack of the conflict rules regulating cross-border securities transactions under such system. Some solutions have been found to settle the problem, including recent local legislation in some states such as America, France and relevant Directives of EU. The Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (the Hague Convention) which adopts the PRIMA rule generally and formally is also involved. Traditional ways such as the lex rei sitae cannot fit well the indirect holding system. The PRIMA rule is the reasonable response to the new development of "property" (recorded in the securities account) under indirect holding system, which making"PRIMA"as a connection point and better meet the request of the applicable law of the securities transaction on rationality and certainty. Research on the theoretical foundation and application of the rule PRIMA is of great practical significance to the development of private international law in the field of securities trading system, particularly in post-conflict law system, protecting the operation of domestic securities market opening to the outside world. The PRIMA rule is essentially the "appropriate" update application of the traditional lex rei sitae way. The paper is also based on this understanding to study the theoretical foundation and application of the rule.Chapter 1 of this paper begins by introducing the background and basic content of the PRIMA rule. Securities indirect holding system is the basis for practice of the PRIMA rule. The securities trading of traditional direct holding system based on the delivery of physical securities, however, the circulation of physical securities have high-risk and high-cost and global securities trading volume soars, direct holding system has not been able to meet changes in the record work and indirectly (multi-storey) holding system came into being. Securities indirect (multi-storey) holding refers to a number of intermediaries holding levels exist between the issuer and actual investors, the names of investors and securities holdings are not reflected directly in the list of securities holders, but only in its most neighboring intermediary - so-called the relevant intermediary to open accounts and "indirect" holding the securities through the books and records of the intermediary. The "PRIMA" rule in cross-border securities transactions makes "Place of the Relevant Intermediary Approach" as the connection point of applicable law. The rule is accepted by the Hague Conference on Private International Law and adopted by the "The Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary". "The Relevant Intermediary" as a core concept of the Convention is a broker for a specific account holder to maintain its securities account, it determined the place of the relevant intermediary directly, which are "the intermediary accounts location" or " the intermediary branch or office location" in "Hague Convention" provisions. At the same time, fungible account is the mainly account in indirect holding system. Thus, the principle of PRIMA greatly simplified the indirect holding system in the choice-of-law process with considerable certainty and operability.In chapter 2, the method of theoretical analysis is used to explore the theoretical sources of the PRIMA rule, by analyzing the criticism and inheritance to traditional conflict theory, excavating deeply the theoretical foundation of the rule and expounding his theory rationality. A reasonable rule on the ownership of the applicable law is apply to the law of the place of ownership certificates, as well as the place where the ruling of the property can be effectively implied. The direct holding system based on the physical certificate and determines the law applicable to securities ownership generally on " lex rei sitae(physical certificate)"; Indirect holding system based on the fungible account, the ownership of the rights as well as interests of all securities actions of investors will be recorded on the books of the recent securities intermediary which directly related to the investors, accounts as a truly "rei sitae" replace the securities certificates. As traditional theory of conflict, "see through" theory can deal with non-fungible accounts of the securities practice, but are powerless to the widespread use of fungible accounts because of lack of actual operational. Securities rights under Indirect holding system both have the attributes of contractual and property, lex rei sitae ignore the law of contract level, only focus on the property level of the Securities, which increased investor credit risks and the difficulty of recourse to property. In the indirect holding system, although lex loci actus can make an applicable result as same as the PRIMA rule, but it has theoretical shortcomings and specific locations of the transaction in computer networks are difficult to define. Although Trust Approach could get effect applying the PRIMA rule, but the different identification of the trust property- interests in securities under indirect holding system will lead to uncertainty and it is difficult to have applications in the country which is absence of trust law. The PRIMA rule has its own profound rationality; it is reasonably defined "the place of the property"– the Place of the Relevant Intermediary account and has its reasonable definition of the "attribute of property" - interests in securities. The rule reflects the inheritance and Innovation of the lex rei sitae.In chapter 3 of this paper, the method of positivism analysis is used to research on main contents the Hague Convention, the relevant EU directives and the relevant legislation in major countries are reviewed. The Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (the Hague Convention) which adopts the PRIMA rule generally and formally is also involved. The Convention use legislative technology of exaggerate the scope of the basic concepts with "certain rights" to replace the "ownership", "action" instead of "the reason of change"to improve the inclusiveness of the convention, at the same time limiting the application of the convention to the property issue between investors and its (direct intermediary) and do not involve purely contractual matters. In the determination of the applicable law rules, the Convention adopted a legislative technology of "softening" the objective conflict rules. Choice-of-law approach is mainly on the subjective point links "autonomy" and objective links points "PRIMA" for supplement which has notable characteristics. The EU has no specifically Convention on the Law of the conflict, but through the development of "finality of the EU directive", "EU security directive", thereby strengthening the applicable legal uncertainty of the PRIMA rule about the trusteeship securities under indirect holding system. France, the United States, Britain and other developed countries in the securities market use the theory of PRIMA as a guide to have a comprehensive amendment of existing laws or set uniform securities transfer or method laws for the legal response to changes in the financial markets. This shows that a large degree of attention has been pay to the PRIMA rule; there will be far-reaching implications on the existing legislative practice.Chapter 4 is based on the practice of China's securities market, which analysis the feasibility and necessity of introducing the PRIMA rule into China. It pointed out that the issuance and transactions of domestic securities have been achieved paperless basically. The B shares and QFII system have the introduction of an indirect held way in varying degrees. China, however, the entities legal system of indirectly held is not perfect; the conflict law system is even blank. Finally, in light of China's legal basis and legal traditions, the article gives some suggestions by learning from the experience of foreign legislation.