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Proprietary rights in indirectly held securities: legal risks and future challenges

Zaccaria, Elena (2015) Proprietary rights in indirectly held securities: legal risks and future challenges. PhD thesis, London School of Economics and Political Science.

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Over the centuries, English law has developed a ‘flexible’ and ‘malleable’ idea of property - in particular through the rules of equity - which has proved capable of adapting to the continuing changes in market practice. The question now to be addressed is whether this ‘flexible’ idea of property can also adequately represent interests in indirectly held securities or whether (as suggested by the Financial Market Law Committee) the new financial practice requires statutory clarification. Unlike most civil law systems, English law has been able to accommodate many new issues arising from the practice of intermediated securities within the existing framework. For example, the complex indirect holding structure is built on the well-developed institution of trust and sub-trust which allows investors to obtain equitable proprietary rights in the assets held for them by the intermediary. The proprietary characterisation of these types of rights has recently been challenged by McFarlane and Stevens, on the grounds that they seem to establish the same level of protection against third parties, by classifying the investors’ rights as ‘persistent rights’ or ‘rights against rights’. The main advantage of using the concept of a persistent right (rather than a proprietary right) is that it provides a better understanding of the legal structure of intermediation, as well as showing that no statutory clarification is necessary within the United Kingdom. The thesis tests the theoretical foundation of McFarlane and Stevens’ argument, using the current Lehman insolvencies as a platform for evaluation. The primary objective is to consider whether the idea of ‘persistent rights’ or ‘rights against rights’ is better able to explain the precise functions of this new practice and overcome the legal uncertainties typically associated with the indirect holding system.

Item Type: Thesis (PhD)
Additional Information: © 2015 Elena Christine Zaccaria
Library of Congress subject classification: K Law > K Law (General)
Sets: Departments > Law
Supervisor: Bridge, Michael and Micheler, Eva

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