facebook   linkedin




Introduction

 

In 2001, the Governing Council approved and the General Assembly adopted the triennial Work Programme including a multi-item project entitled “Transactions on Transnational and Connected Capital Markets”. Work on the project is being conducted on an item-by-item basis and has resulted thus far in the adoption of (1) the UNIDROIT Convention on Substantive Rules for Intermediated Securities (to be known as the ‘Geneva Securities Convention’) in October 2009 by the diplomatic Conference to adopt a Convention on Substantive Rules regarding Intermediated Securities and (2) the UNIDROIT Principles on the Operation of Close-Out Netting Provisions by the UNIDROIT Governing Council at its 92nd session in May 2013.  More information about these instruments is available via this link

 

In view of the rapid progress made by the Committee of governmental experts negotiating the then draft Convention on Harmonised Rules regarding Intermediated Securities, the Governing Council recommended in 2005 that the General Assembly authorise, following indications of preferences by member States, work on the next item in the project, i.e. the preparation of principles and rules capable of enhancing trading in securities in emerging markets.  Upon adoption of the UNIDROIT Principles on the Operation of Close-Out Netting Provisions at its 92nd session in May 2013, the Governing Council decided to elevate the priority given to the preparation of such principles and rules. This decision was approved by the General Assembly at its 72nd session in December 2013, which included preparation of the Legislative Guide on Principles and Rules capable of enhancing trading in securities in emerging markets in the Work Programme of the Organisation for the 2014-2016 triennium at this higher level of priority (UNIDROIT 2013 – A.G. (72) 4).

 

 

Background and initial views on content 

 

Both on the occasion of fact finding seminars, held in Asia and Latin America in the context of the work on intermediated securities, and in comments submitted to the Governing Council, member States from those regions voiced the urgent need to have basic commercial law rules applicable to trading in securities developed in the context of a multilateral Organisation with special expertise such as UNIDROIT. 

 

The Secretariat submitted the following list of issues for the Council’s consideration and potential further analysis. The Council discussed the issues and stressed the need to focus on transactional law. 

 

• Nature and types of securities.

 

• Fungibility of securities and (degree of) dematerialisation: immobilised, fully dematerialised securities, substitutes.

 

• Transactional structure of bond issues: private-law restrictions on debt financing; direct placement by (specific types of) issuers; mandatory involvement of intermediaries; contractual and proprietary relationships between issuer, intermediaries/underwriters and investors (internal relationship between underwriters to the extent that local underwriters are involved and local law is governing that internal relationship and/or their rights and obligations vis-à-vis the issuer); standard contract terms and their – ex ante or ex post – scrutiny; potential conflicts between applicable company law and applicable contract law; legal or contractual community of bond holders.

 

• Transactional structure of share issues (IPOs) and problem areas common to bond issues: enabling or limiting rules of underlying company law; methods for determining initial share price (fixed, bookbuilding, auctions) and respective transactional law; differentiation of private placement/public offering; allotment of shares, in particular equal treatment of investors/bidders; status and impact of codes of conduct for issuers and intermediaries; IPOs over the Internet, including conflict-of-laws issues; the issuer’s prospectus as the basic information provided in the event of a public offering, its content and liability of the issuer and intermediaries for inaccuracies. 

 

• Organisational and transactional provisions to enhance liquidity on secondary markets, including role and legal position of intermediaries and central counter parties; conflict-of-laws rules regarding foreign market participants. 

 

• General contract law or special regimes for trading in securities; impact of trade usages; impact of standard contract terms legislation; consumer/retail investor protection; special regimes for options, futures and other derivatives. 

 

• Contractual and proprietary issues of clearing, settlement and custody as well as use of securities as collateral (to the extent not sufficiently addressed in the then preliminary draft Convention on Intermediated Securities for the needs of any specific emerging market). 

 

• Securities lending.

 

• Private law framework for disclosure, prevention of insider trading and other forms of market abuse and for the conduct of market participants. 

 

 

Project status and documentation 

 

In addition to the Geneva Securities Convention, the diplomatic Conference to adopt a Convention on Substantive Rules regarding Intermediated Securities (Geneva, 5-9 October 2009) adopted a Resolution relating specifically to activities to support promotion of the entry into force and implementation of the Convention. To this effect UNIDROIT, in its capacity as Depositary of the Convention, was requested to make all appropriate efforts to organise activities such as meetings, conferences, and seminars with a view to promoting awareness and understanding of the Convention and assessing its continued effectiveness. 

 

The diplomatic Conference also established a Committee on Emerging Markets Issues, Follow-up and Implementation (the Committee) to assist the Secretariat in its task. The Committee is co-chaired by Brazil and China. The current members of the Committee are: Argentina, Cameroon, Chile, France, Greece, India, Japan, Nigeria, Republic of Korea, South Africa, Turkey, United States of America, and the European Community. The observers are: Indonesia, European Central Bank, EuropeanIssuers, Hague Conference on Private International Law and Trade Association for the Emerging Markets. As an informal group of experts is currently nearing completion of the preparation and review of an initial draft of a Legislative Guide on Intermediated Securities, which identifies and elaborates upon principles and rules capable of enhancing trading in securities and will be reviewed both within the Committee and in consultation with other organisations and interested stakeholders, a fourth meeting of the Committee will be convened in Beijing, China on 29-30 March 2017.  For more information on the status of the project, see UNIDROIT 2016 – C.D. (95) 6 rev. Documentation from each of the Committee’s three previous meetings is below.

 

   

(1) 6-9 September 2010 (Rome):

 

The first two days consisted of a Colloquium on “The law of securities trading in emerging markets: lessons learned from the financial crisis and long-term trends”, with a view to identifying possible topics suitable for insertion in a future Legislative Guide on Principles and Rules capable of enhancing trading in securities in emerging markets. 25 speakers made presentations on a wide range of topics related to securities trading and the functioning of capital markets.

 

On the remaining days, the Committee met and considered a draft guidance document (draft Accession Kit, see UNIDROIT 2010 – S78B/CEM/1/Doc. 3) that was prepared by the UNIDROIT Secretariat as a first step toward the development of a Legislative Guide on Principles and Rules capable of enhancing trading in securities in emerging markets. It was intended to provide advice for countries that ratify the Geneva Securities Convention on how best to incorporate the Convention and integrate it into their domestic legal systems. The Committee decided to divide the document in two. The first part containing an explanatory memorandum for the assistance of States and Regional Economic Integration Organisations on the system of declarations under the Geneva Securities Convention ultimately became an UNIDROIT document in its capacity as Depositary of the Geneva Securities Convention (see UNIDROIT 2011 – DC11/DEP/Doc. 1 rev.). The second part containing references to sources of law outside the Convention was subsequently prepared and provided to the Committee in advance of its meeting in Rio de Janeiro and could serve as the basis for the future Legislative Guide (see UNIDROIT 2011 – S78B/CEM/2/Doc. 2).

 

 Colloquium: Programme and presentations

Committee on Emerging Markets Issues, Follow-up and Implementation. First meeting, Rome, 6-9 September 2010. Colloquium "The law of securities trading in emerging markets: lessons learned from the financial crisis and long-term trends". Villa Aldobrandini, Via Panisperna 28, 00184 Rome, 6-7 September 2010. 

 

The integral versions of some of the presentations have been published in the Uniform Law Review, vol. 15 (2010) and vol. 16 (2011).

 

UNIDROIT 2010 – S78B/CEM/1/Doc. 4

Committee on Emerging Markets Issues, Follow-up and Implementation. First meeting, Rome, 6-9 September 2010. Report (prepared by the UNIDROIT Secretariat) 

 

UNIDROIT 2010 – S78B/CEM/1/Doc. 3

Committee on Emerging Markets Issues, Follow-up and Implementation. First meeting, Rome, 6-9 September 2010. Accession Kit to the UNIDROIT Convention on Substantive Rules for Intermediated Securities ("Geneva Securities Convention"). Information for Contracting States in respect of the Convention's declarations and references to sources of law outside the Convention. Draft prepared by the Secretariat 

 

UNIDROIT 2010 – S78B/CEM/1/Doc. 2 

Committee on Emerging Markets Issues, Follow-up and Implementation. First meeting, Rome, 6-9 September 2010. Proposal for an international instrument on the Netting of Financial Instruments - August 2010

  

UNIDROIT 2010 – S78B/CEM/1/Doc. 1

Committee on Emerging Markets Issues, Follow-up and Implementation. First meeting, Rome, 6-9 September 2010. Annotated agenda - June 2010 

   


(2) 27-28 March 2012 (Rio de Janeiro):

 

The first day was devoted to a Colloquium on financial markets law which considered the actions taken by emerging markets to create a favourable environment for trading in intermediated securities and discussed how emerging markets have reacted to the financial crisis and which means are to be adopted to increase legal security and investor protection.

 

On the second day, the Committee examined the reception given to the Geneva Securities Convention in various countries, particularly in emerging countries, was presented the Official Commentary on the Convention, and considered legislative measures to implement the Convention and incorporate it in domestic law, as well as concrete proposals for its promotion. It also considered future work by UNIDROIT in the area of financial markets law.

 

 

Colloquium: Programme and presentations

Committee on Emerging Markets Issues, Follow-up and Implementation. Second meeting – Rio de Janeiro, 27 and 28 March 2012. Colloquium " Promoting investor confidence and enhancing legal certainty for securities trading in emerging markets". Rio de Janeiro, 27 March 2012. 

 

UNIDROIT 2012 – S78B/CEM/2/Doc. 3 

Committee on Emerging Markets Issues, Follow-up and Implementation. Second meeting, Rio de Janeiro, 27-28 March 2012. Report (prepared by the UNIDROIT Secretariat)

  

UNIDROIT 2011 – S78B/CEM/2/Doc. 2 

Committee on Emerging Markets Issues, Follow-up and Implementation. Second meeting, Rio de Janeiro, 27-28 March 2012. Information for Contracting States in respect of the Convention’s references to sources of law outside the Convention – November 2011

  

UNIDROIT 2011 – S78B/CEM/2/Doc. 1

Committee on Emerging Markets Issues, Follow-up and Implementation. Second meeting, Rio de Janeiro, 27-28 March 2012. Annotated agenda – November 2011

  

 

(3) 11-13 November 2013 (Istanbul):

 

The first two days consisted of the Colloquium on financial markets law to consider actions taken by emerging markets to create a favourable environment for trading in intermediated securities, with particular emphasis on enhancing financial integrity under national law. The Colloquium focused particular attention on the disparities between national law and the Geneva Securities Convention, the need for national and cross-border insolvency rules, the potential effect of corporate governance systems on securities trading, and the role of specialised investment instruments. It also covered the impact of the UNIDROIT Principles on the Operation of Close-Out Netting Provisions in reducing systemic and counter-party risk in emerging markets and the manner in which they may be incorporated into national law. 

 

On the third day, the Committee first welcomed the participation of Turkey as a member since May 2013, at the invitation of the other Committee members, and considered the follow-up and promotional measures undertaken by the Secretariat, as well as legislative measures undertaken by the States to implement the Convention in emerging markets. The Committee then focused its attention on the scope and structure of the Legislative Guide by discussing the Draft Annotated Outline presented by the Secretariat in cooperation with the informal working group established at by the Committee at its second meeting (see UNIDROIT 2013 - S78B/CEM/3/Doc. 2 ), as well as a narrower outline presented by a group of States (see Annexe 2, UNIDROIT 2014 – C.D. (93) 5 ). It was proposed that the Committee commence drafting of the Legislative Guide based on the structure and content of the narrower outline and such proposal was accepted by consensus by the Committee.

 

 

Colloquium: Programme and presentations 

Committee on Emerging Markets Issues, Follow-up and Implementation. Third meeting, Istanbul, 11-13 November 2013. Colloquium "Enhancing Financial Integrity in Emerging Markets: The Geneva Convention and the UNIDROIT Principles on Close-Out Netting under National Law". Istanbul, 11-12 November 2013. 

 

UNIDROIT 2014 – S78B/CEM/3/Doc. 3

Committee on emerging markets issues, follow-up and implementation. Third meeting, Istanbul, 11-13 November 2013. Report (prepared by the UNIDROIT Secretariat) 

 

UNIDROIT 2013 - S78B/CEM/3/Doc. 2 

Committee on Emerging Markets Issues, Follow-up and Implementation. Third meeting, Istanbul, 11-13 November 2013. Annotated Draft Outline: Legislative Guide on Principles and Rules capable of enhancing trading in securities in emerging markets - October 2013 

  

UNIDROIT 2013 – S78B/CEM/3/Doc. 1 

Committee on Emerging Markets Issues, Follow-up and Implementation. Third meeting, Istanbul, 11-13 November 2013. Annotated agenda - July 2013

We use cookies on this website. By using this site, You agree that we may store and access cookies on your device.