Unidroit convention on substantive rules for intermediated securities
| Unidroit convention on substantive rules for intermediated securities | |
|---|---|
| Signed | 9 October 2009 |
| Location | Geneva, Switzerland |
| Effective | not effective |
| Condition | 3 ratifications |
| Signatories | 1 (Bangladesh) |
| Ratifiers | None |
| Depositary | International Institute for the Unification of Private Law |
| Languages | English and French |
The Unidroit convention on substantive rules for intermediated securities, also known as the Geneva Securities Convention, was adopted on 9 October 2009. So far (26 February 2012), it has been signed by only one of the 40 negotiating States (Bangladesh). The adoption of the official commentary is forecasted by December 2010.
This convention adopted under the aegis of the International Institute for the Unification of Private Law (Unidroit) complements the "Hague Securities Convention" adopted on 17 January 2002 by the Hague Conference on Private International Law, which has so far been signed and ratified by Switzerland and Mauritius.
Their common American inspiration, although partially based on some of the most free-trade EU law instruments, explains the reluctance of institutions and Member States of the European Union to sign and ratify these conventions which are found guilty of not having taken enough into account the lessons drawn from the financial crisis of September 2008. If their signature and their ratification were to be limited to a very small number of contracting States, both conventions would probably start a new career as "model laws".
Emerging countries as well as European Countries that would transpose such model laws into their own legislation would then turn their traditional civilian law approach based on ownership to a US inspired contractual approach of the holding of securities.
The two ultimate issues raised by such a transposition of Unidroit into internal legislation would be (1) whether the investors in securities will still be allowed to count in their balance sheet the securities that they have purchased as their own assets (Lehman case), and (2) whether these investors will still have, in case their depository or its subdepository becomes insolvent, the possibility to rivindicate these securities as their own against the administrative receiver (Madoff case).
As for the Hague Securities Convention, the Geneva Securities Convention concerns only securities that are not traded under a paper form. These securities, sometimes called "dematerialised securities", constitute in many States, more than 99% of the securities issued by listed companies on the so-called "regulated markets".
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