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Securities ownership rules in the EU: national regimes, transnational investments?

Professor of Financial Law Matthias Haentjens has been awarded a scholarship by the European Central Bank (ECB) in the 2017 edition of the ECB Legal Research Programme.

His research proposal “Securities ownership rules in the EU: national regimes, transnational investments” will focus on the lack of uniform legislation in the EU in the field of both conflict of laws rules and the substantive law regarding property law issues related to book-entry securities.

The Giovannini report of 2001 already suggested that the cross-border settlement of securities transactions is an estimated eleven times costlier than a pure domestic settlement. One of the reasons, the report argues, is due to differences in applicable law. Also, it is acknowledged that the present uncertainty regarding what law may apply to these transactions may contribute. Prof. Haentjens’ research will work on the assumption that the current situation is highly undesirable. The impossibility to quickly determine “who owns what” may cause significant losses. The insolvency of Lehman Brothers in 2011 has shown us that in a stressful situation, it is of paramount importance to quickly determine just that. The European Commission is well aware of these legal and financial consequences and is preparing a harmonisation instrument, but no draft has been published as of yet.

The research paper addresses the issues as described above in a specific and practical way. Generally, it will seek an answer to the following two questions: “What are the possibilities for future reform in this area; and what should the priority steps be for the EU and other countries?” For various selected jurisdictions Professor Haentjens will examine the possibility of a harmonised legislative instrument. He assumes that the more strongly rules and norms in a given jurisdiction relate to each other the more difficult it will be to introduce new European  rules that derogate from the general ones. This proposed paper will be drafted in close cooperation with colleagues of the Hazelhoff Centre of Financial Law and various scholars from foreign universities.

Prof. Haentjens will present his research in two seminars to be held at the ECB in Frankfurt on 30 May 2017. After submitting the final draft of a research paper by 30 November 2017, publication will be sought in an international academic journal.

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