Study Of Cross-border Indirect Holdings Of Securities By The Substantive Law

The convenience and safety brought by the securities held with an intermediary mechanism (Intermediary Mechanism) wins the popularity of such mechanism in the financial market all around the world. Meanwhile, the new mechanism brings a large number of legal problems to each country, which not only manifests in the conflict of laws between different countries, but also manifests in the hysteresis and conflicts of and between the domestic legislations. In 2001, the working group on securities held with an intermediary in respect of the transnational trade was established in the 80th session of Governing Council by International Institute for the Unification of Private Law (UNIDROIT). In May 2007, Preliminary Draft Convention on Substantive Rules Regarding Intermediated Securities (Rome Convention) was adopted by the Committee of Governmental Experts at its fourth session, and waiting to be discussed and passed in the Diplomatic Conference in 2008. This achievement will effect profound influence on the legislation and perfection of each country including China in respect of the relevant field.Rome Convention establishes a consummate legal system for Intermediary Mechanism. However,the existence of intermediary and nominee mechanism brings a lot of legal risks, such as the systematic risk out of the bankruptcy of intermediary, the risk encountered by the investors out of the embezzlement of securities held with intermediary. Rome Convention imposes obligations for the contracting parties which provides a comprehensive protection to the international investors and is better for the stabilization of international finance system. We shall be enlightened by Rome Convention and determine the nature of the investors'securities right as well as the nature of the custodial securities, establish a consummate legal system on mortgage, which will make us updated with the world pace.