![]() ![]() My body has yearned for the boy that I had known growing up, my rock, my Protector. In January 2001, at the first Special Commission of the Hague Securities Convention, the look-through approach was resoundingly rejected by the 119 experts in attendance.I never thought I would see him again, not in a million years. It is the basis for the Hague Securities Convention, which if ratified, will supersede the look-through approach globally. The " Place of the Relevant Intermediary Approach" (or "PRIMA") is increasingly being favoured over the look-through approach. These principles would lead to the application of the law of the intermediary, be it under the heading of the "characteristic obligation", "the most significant relationship" or "the proper law". Rather, the applicable law has to be ascertained by reference to the conflict of laws principles for contractual matters. If an investor holds merely contractual rights against its intermediary for delivery of securities, it no longer seems accurate to refer to the lex rei sitae, which is a property law concept. Because the position in many cases cannot be satisfactorily determined, there remains an element of systemic risk. Uncertainties as to the approach, and of the look-through approach, if applicable, lead to significant expense for market participants. Where a diversified portfolio of securities with issuers from a number of jurisdictions is involved, the laws of a number of different jurisdictions may be applicable. ![]() If the applicable law is the law of the place where the relevant securities certificates are stored, and the holding is through various tiers of intermediaries a collateral taker may be unable to discover where the securities certificates in questions are actually located. In some circumstances underlying securities certificates may be kept in more than one jurisdiction.
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