A legislative proposal has been submitted to the Second Chamber of Parliament to amend the Securities Giro Transfer Act (Wet giraal effectenverkeer). This proposal intends to increase investor protection and introduces a far-reaching form of dematerialisation of securities transactions. Currently, the Securities Giro Transfer Act only offers protection to an investor in the event of bankruptcy of a bank or investment institution in case two conditions are met:

  • The securities must be in the form envisaged by the Securities Giro Transfer Act, i.e. securities that the Central Securities Depository has determined could belong to a collective deposit and a giro depot.
  • These securities should be held in accounts of institutions that are members of the Central Securities Depository.

The legislative proposal extends this protection to almost all securities under the FMSA. The protection will also apply to clients of intermediaries other than those that are members of the Central Securities Depository.

In addition, it is proposed that bearer securities may only be transferred to intermediaries and the Central Securities Depository for safekeeping by means of global certificates.

The explanatory memorandum clarifies that immediate and full dematerialisation by abolishing bearer securities would require an amendment of the Dutch Civil Code and would be a considerable burden for the business community. For this reason this approach was not adopted.