The 4th session of the committee of governmental experts on Intermediated Securities met in May 2007 to continue negotiation of the draft Convention. The Convention deals primarily with the rights of account holders in relation to intermediated securities - securities held through financial intermediaries.
The UK’s comments focused mainly on the innocent purchaser defence in Article 12 and on the effect of insolvency in Article 16. Article 12 allows an innocent purchaser to obtain good title to securities, notwithstanding competing interests in those securities. The UK is arguing for the insertion of an “attributed knowledge” concept to prevent manipulation of this provision by purchasers using an agent or corporate structuring to set up the argument that they did not know about competing interests. Article 16 currently provides that local rules on preferences and fraud on insolvency are not affected by the Convention whilst the UK’s position is that domestic insolvency law should take precedence over the Convention in all cases.
View UNIDROIT latest round on the International Convention on Intermediated Securities, (PDF 53.4KB), May 2007