Trades, Bona Fide Acquisitions and Priority Rules in the Electronic Securities Settlement Systems for the Secondary Securities Markets in Germany and England

Abstract

This article analyses country-specific principles in the electronic securities holding systems in Germany and England. It hereby builds, inter alia, upon two fundamental differences: first, in Germany, investors legally co-own a pool of unallocated securities held at a Central Securities Depository. In contrast, English investors are merely entitled to beneficial (and not to legal) ownership in the electronic holding system. Secondly, property formerly belonging to the seller is not transferred to the buyer in the conduit of a trade in England whereas, in Germany, a derivative transfer of (legal) co-ownership interests normally takes place. In light of this, the article focuses on the legal concepts governing trades, particularly targeting the trust structures, rights and duties in electronic holding systems, derivative transfers of property, bona fide acquisitions and priority rules.