UNIDROIT has recently launched an intergovernmental process intended to set an international non-binding standard for close-out netting legislation — and hopes to conclude its work in the course of 2013.The colossal exposures inherent in the derivatives, securities lending, repo, forex and...

This paper sets out eight principles designed to ensure the cross-jurisdictional enforceability of close out-netting. Close-out netting is heavily used by the financial industry and used in many regulatory mechanisms like in particular bank's capital requirements (Basel II). However, as soon as...

Modern patterns for holding investment securities face three basic legal challenges: first, negotiability and the possibility of good faith acquisition must be ensured as they are the basis of today's anonymous trading and settlement of securities. In the past, securities have been incorporated...

In the general perception, financial institutions' immense repo and derivatives portfolios are friends and foes alike: friends, because they provide for levels of market liquidity that would be unimaginable without them. Foes, because both types of transactions are somehow regarded as being...

This paper discusses financial transactions through which a cash-driven market participant raises financing, such as, for instance, a manufacturer taking out a loan from a bank, a blue-chip company issuing bonds to the public, or a bank entering a repo with another bank. From the opposite...

This introductory paper explores the general nature of financial regulation as a set of behavioral rules. Public authorities impose these rules on market participants. The aim is to influence market participants' behavior in order to achieve certain regulatory goals. The financial crisis has...

The wide use of netting agreements is regarded as highly beneficial, both by financial market participants and by regulatory authorities. One might even say that some of the fundamental mechanisms used to govern modern markets (risk management, establishment of capital requirements) are...