The Rise and Fall of Trust Based Intermediated Securites: An Economic Jurisprudential Approach to Trust Based Intermediated Securities

There has been a discussion for some years regarding the place of intermediated securities, how they should be legally underpinned and their technological basis. A particularly important source that formed a large portion of the inspiration of this thesis was Intermediated Securities: Legal Problems and Practical Issues edited by Louise Gullifer and Jennifer Payne at the University of Oxford.1 This key book provided a selection of papers outlining some theoretically and practically nuanced debates. While this book was exceptionally thought provoking, there was a particular issue that was apparent to the author. In short, this was a focus on the black letter law. There were questions that remained, particularly regarding why there was an insistence on utilising trust for underpinning intermediated securities in the UK when there has been significant strides in technology that could facilitate a more efficient mode of intermediation. This thesis therefore, seeks to answer this question. It hypothesises that, in combination with the recent advancements in technology, trust is an outmoded legal regime for intermediated securities. In particular, the thesis shows that technology has obfuscated the proprietary reasons underlying the use of trust, with investors able to hold full ownership of their shares and intermediaries acting as simple facilitators akin to agents. In order to highlight this change, the thesis undertakes an economic analysis of the law, especially using transaction cost analysis. Through this analysis, the efficiencies of the trust system vis-à-vis a new modality will be shown to be significantly diminished or eliminated. Therefore, this thesis presents a novel contribution to this field. Through undertaking an economic analysis of the current law and differing legal modalities, the thesis provides an innovative analysis and solution to the problems that permeate the intermediated securities system.