Indirect Interests In Securities Held By Institutional Application Of The Law,

Now the most countries of the world have all adopted the indirect holding system of securities in which the nature of investors'rights and interests in securities have been changed. Some countries described rights and interests in securities of investors under indirect holding system with traditional concepts, such as trust, co-ownership and other concepts, while others defined it with innovation notion"security entitlement". Regardless of traditional concept or innovative methods, they all reflected the uniform legal principles of priority of indirect holder's rights, ruled out the legal risks faced by investors under definition of purely contractual rights .The change of the nature of investors'rights and interests in securities under the indirect holding system makes the traditional conflict of laws rules facing the difficulties of the law application dilemma. The uncertainty of law application is bound to affect the operation of whole system of cross-border securities transaction. As the latest conflict of laws rule, PRIMA principle overcomes the disadvantages of traditional choice of law rules, innovates and develops the lex rei sitae theory, and have been adopted by most countries'legislation and HAGUE CONVENTION ON THE LAW APPLICABLE TO CERTAIN RIGHTS IN RESPECT OF SECURITIES HELD WITH AN INTERMEDIARY (hereinafter referred to as the "Hague Convention"). PRIMA principle is conform to the intrinsic value search of certainty and predictability be possessed by choice of law method, and is by far the most mature method of conflict of laws.China has adopted the indirect holding model of securities, but the direct holding pattern still occupies a dominant position. With the internationalization development of China's securities market, we can predict the indirect holding system will inevitably take the place of direct holding system and hold the dominant position. Currently, China have no laws and rules regulating the law application of rights and interests in securities under the indirect holding system, which is not conducive to the protection of the interests of investors. Acceptance of PRIMA principle should be the best way to makes up for the legislative gaps. At the same time, China's relevant authorities and institutions should pay close attention to the "Hague Convention", and accede to the Convention in due course.