Party Autonomy in International Property Law - Peace Palace Library

11. Financial Collateral Arrangements and Party Autonomy
entries and there is no transfer whatsoever of paper. 67 On the other hand,
under Dutch law, investor protection against an intermediary insolvency
takes the form of a proprietary right in the pool of securities held by that
intermediary, which is granted to the investor by statute. The situation
under English law is somewhat similar: the right of the investor against
an intermediary is deemed to be of a proprietary nature precisely because
it is protected against the intermediary’s general creditors in the event of
its bankruptcy. 68
In view of this proprietary nature of the rights of an investor, it is difficult
to abandon altogether the connection between physical bearer securities
(and the corresponding property law implications) and simply summarize
the investors’ rights as a contractual claim against the intermediary that
can be manipulated by the account-holder and the intermediary as they
please.
There are, however, various arguments to support the view that the rights
of an investor are ultimately of a contractual nature only and that, consequently,
security over these rights can take the same form as was argued
for cash balances, i.e. manipulation of the contractual rights of the holder
of the securities account against its intermediary. I will only list my arguments
here 69 – for a more comprehensive overview reference will be made
to other publications:
i. the connection with physical pieces of paper (where it exists at all) is
only symbolic in modern securities law; the most important right of
an investor is the investor’s rights against his or her securities intermediary,
whose records determine who will be entitled to exercise the
rights under the relevant securities with there being no way of proving
entitlement to these rights other than through an account statement
with a securities intermediary; 70
67
See Goode 2003, § 6-02 for a description of this development. See also Wood
2007b, §§ 29-052 and 29-053; Haentjens 2007, pp. 29-41; and Benjamin 2007,
§§ 1.78-1.92.
68
See Benjamin 2007, chapter 2 (specifically, §§ 2.33-2.34), chapter 13 and chapter
14 (specifically, §§ 14.06-14.27).
69
Wibier 2009, pp. 388-411, specifically, § 3.4.
70
Hudson 2009, § 35-09: ‘The proprietary right of the investor is therefore in the
chose in action against the registrar and not in any individual bond.’
Reinout M. Wibier
257
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