Intermediation and Beyond

Our recently published book Intermediation and Beyond , edited by Louise Gullifer and Jennifer Payne, is the result of a project run by the Commercial Law Centre at Harris Manchester College. The starting point for the project was a debate on how various English law consequences in relation to securities differed (or potentially differed) when those securities were held through intermediaries compared to where they were held directly. Thus, for example, the enforcement of debt securities is not as straightforward, nor is suing the issuer for breach of contract, nor voting on a cancellation of a resolution to delist a company. However, the project broadened to include a number of other issues that arise in this context including problems arising in the context of equity securities, conflict of interest issues and also the extent to which technological change (in particular the advent of blockchain) might help or hinder the development of these issues. A group of experts, domestic and international, including barristers, solicitors, inhouse lawyers and academics were assembled to discuss these issues and the result of the group’s discussions and deliberations are contained in this book. The book, therefore, is more than just a series of essays on related subjects. The arguments made have been honed by extended discussion between experts, and include ideas which have emerged as a result of that discussion.  

The book focuses on four main topics:

(i)             the enforcement of debt securities held through intermediaries, including the ‘no look through’ principle and the difficulties this poses in terms of investor rights;

(ii)           voting and governance issues where equity securities are held through an intermediary;

(iii)         conflict of law issues, which are heightened by the increasing growth and internationalisation of securities trading and finance; and

(iv)          the future of securities holding and settlement and, in particular, whether and how the system should be reformed.

Fuller details of the contents of the book can be read in a shortened version of the introduction. In the conclusion to the book the threads of the discussions and analyses in the previous chapters are drawn together by the editors. The balance of advantages and disadvantages for intermediated holdings is considered, and the potential approaches to tackling the difficulties that have arisen are examined closely. The potential for the law to intervene in this area is analysed, both at a national level (the problems arising in English law are considered) and also at transnational level, either via substantive harmonisation or an agreed conflict of law approach. The role of the market to provide solutions is also examined. Finally, the possibility of alternatives to, or considerable change to, the current intermediated system is considered. 

This book makes some very significant contributions to the literature in this area. Not only is it a critical analysis of the current position of all parties within the intermediated system, of the reasons for the system and of its advantages and disadvantages, it examines a wide range of possible responses to the consequences of the current system, legal, market-based and technological, and looks forward to the future. Unlike some of the other books in the area, it has a particular focus on English law, but it also grapples with the issues thrown up by cross-border holdings, and recognises the importance that international portfolios play in the capital markets. It makes an important contribution to the debate in this critically important area of law and market practice, and will be valuable for policy makers, as well as lawyers and market participants.

Louise Gullifer is Professor of Commercial Law, University of Oxford.

Jennifer Payne is Professor of Corporate Finance Law, University of Oxford.