In banking and finance, transnationality permeates the day-to-day professional life and makes the dedicated lawyer an internationalist by necessity. There are good reasons for this: the intangible nature of services, the desire of operators even regulated to conquer foreign markets; sometimes because of the extraterritorial spread of local policies relating to the person of the operators or the products marketed. Although it does not always have a good reputation, private international law, with its promise of a widely understood conflict-oflaws discipline, is making inroads into the legal practice of this specialised and globalised sector.

For a young academic, it was an ambitious undertaking to systematically combine private international law with the law of financial markets and instruments. All the more so since, as Mr Augustin Gridel's methodological commitment attests from the introduction to his thesis, any good conflict-oflaws solution is developed by contemplating the domestic legal and regulatory material potentially applicable to cross-border relations. The relevant domestic law is widely publicised and, in Europe at least, consists of two equal layers, one national, the other European.

One therefore encounters the difficulty inherent in these matters, which are steeped in administrative regulation: the international applicability of public law plays a driving role, although the theory is not guaranteed, since it constitutes the dark side of the conflict-of-laws’ historical development.

The issue of a financial instrument. The expression ‘issue’ is borrowed from monetary law. This borrowing is undoubtedly explained by the fact that, like money, financial instruments constitute intangible assets, circulate, are liable to be recorded in an account and allow for payment.However, French authors do not always designate the same thing, and refer indistinctly to the issue of a security, a share, or even the creation of a security.All these expressions are not equivalent, however, and two clarifications are necessary with regard to the purpose of the issue and its process.

First, according to French law, the object of the issue is the negotium, i.e. the share, debt or unit of a collective investment scheme.However, the issue results in the creation of an instrumentum,the security, which accounts for the negotium issued. It is only by metonymy that we speak of the issue of securities.Today, securities are made manifest in the form of a book entry, the regime of which differs from traditional instruments in several ways: it is necessary for the materialisation of the negotium in order to allow its transfer, its regime allows for easier circulation, and its holding is accompanied by a presumption of ownership.These elements explain why it is sometimes difficult to distinguish the instrumentum from the negotium, but the resolution of conflicts of law makes it necessary, ‘and if the search for the applicable law depends on this distinction, it helps at the same time to establish it: by becoming aware of the fact that one aspect of the phenomenon would not reasonably be subject to the same law as another, one is led to specify what each of these entities consists of’.It should be added, however, that the situation is made more complex when the issuer places its securities with an intermediary who, in turn, issues securities offering identical prerogatives to those of the securities it holds.This frequent case, which is that of depositary receipts, makes it necessary to clearly identify who the issuer of the security is, and what prerogatives are actually offered by the security.Since depositary receipts are a variety of debt securities, the conflict of laws rules studied here are applicable to them.

Definition. The marketing of financial securities, despite its importance, is curiously not subject to any general definition in French positive law.In European law, only the Directive on alternative investment funds defines it as ‘an offer or placement, directly or indirectly, at the initiative of the manager or on his behalf, of units or shares of an AIF which he manages, to investors domiciled or having their registered office in the Union’.It can be inferred that the marketing of financial securities is understood as an offer or placement of financial securities to investors. This definition allows three remarks. Firstly, the author of the marketing acts is not necessarily the issuer.Secondly, the marketing may take place without the securities being admitted to trading on a trading platform. Such admission is one of several marketing methods. Finally, marketing may be directed at the public in general or at selected investors;in both cases, this function of marketing explains why it is subject, in principle, to the law of the place where its intended recipients reside. These observations lead to a clear distinction between two aspects of the marketing process: firstly, the issuer's decision to market the securities by soliciting the public and, secondly, the implementation of this decision, which is manifested in marketing acts.

The marketing process. While subsequent marketing acts are not necessarily the responsibility of the issuer, the initial decision to market through public solicitation is the responsibility of the issuer. This is due to the “freedomresponsibility” pairing. Indeed, the issuer, if it decides to solicit the public, will bear the information obligations that such solicitation triggers. These disclosure obligations are of two types: the prospectus, a one-off document, the preparation of which is triggered by a public offer and is subject to administrative approval, and the periodic disclosure obligations, triggered by the admission of the securities to trading.

Double degree of regulation of property law. The status of securities, from a proprietary point of view, is often obscured by confusions arising from property law, which justify some remarks on the bias of the developments to come. We subscribe to this school of thought, which distinguishes between two levels of regulation stemming from property law, the first relating to ownership of property and the second, isolated within the first, concerning rights over tangible things.This conception of property law, which considers that the ‘proprietary status’ of rights is independent of their content, has several consequences.

Firstly, there is a ‘primary regime’of property law, applicable irrespective of the content of the relevant objects. This primary regime can be determined by reference to the domain of the applicable law. This is mainly made up of the following questions : the regime of its transfer; the opposability of this transfer to third parties; the constitution and effects of conventional and legal guarantees likely to have an impact on the thing; the conflicts of competing rights, also known as priority rights. These elements make it possible to emphasise the importance of the issue at hand. The choice made by the French legislator to favour, in matters of securities, the good faith purchaseris not universal: priority conflicts are not necessarily resolved in favour of the purchaser and, even when this is the case, not necessarily under the same conditions. Above all, the scope of this law extends to all the guarantees which have an impact on the security: the validity and the terms of their enforcement depend on the proprietary status to which they are attached.

The reason for this is simple: the law of guarantee is a branch of property law, if only because their enforcement always requires a form of alienation. If the links between the law of guarantee and the law of property no longer need to be demonstrated,the same applies to the links between the law of guarantee and the law of insolvency,6 not to mention the fact that the usefulness of the guarantee ultimately derives from the means of enforcement that they open up to their holder.

Duality of European managers. From the foregoing, it should be noted that there are three market infrastructure managers: trading platform managers(investment firms and market operators), whose statutes are subject to MiFID 2, clearing houses or central counterparties, which are subject to EMIR, and central securities depositories, which are subject to CSD Regulation.Although there are differences in the status of managers, they all share the common feature of being subject to a dual connecting factor. First, these managers are subject to a national legislative connecting factor. This is done through their registered office, which is understood to be their real seat, and has a particularly broad scope (Section 1).

Secondly, managers are subject to an administrative connecting factor. The latter reflects the designation of the administrative authority competent to approve the manager and the supervision to which the latter is subject in the exercise of his or her activity. Until recently, there was a parallelism of connecting factors. Indeed, the administrative connecting factor for managers was also the registered office. This criterion, which stemmed from a decentralised model based on a division of administrative powers between the authorities of the Member States, was based on mutual recognition. This model is now being challenged by a centralised model, where the decision is taken by an EU agency, whose legal order is therefore primarily competent to assess all administrative aspects of the managers status. The particularity of this centralised model is twofold: on the one hand, it can be deconcentrated, restoring to the national authorities part of their competence and, on the other hand, the existence of an administrative connecting factor to an EU agency does not call into question the manager's legislative connecting factor, resulting in the competent authority applying the law of the manager's headquarters (Section 2).

Functions of set-off. Once a contract is formed, the regulation of collateral and set-off can disrupt its performance. As the former have already been studied,it is the set-off that will be studied here. Set-off, whether contractual or legal in origin, is defined as ‘the simultaneous extinction of reciprocal obligations between two persons’.Its primary function of paymentis widespread in both civil law and common law systems.However, as Professor Jérôme François writes, set-off ‘is an institution whose extinctive function does not reveal its full richness. It also fulfils a guarantee function and may even, in certain cases, represent the best of guarantees for the party who is in a position to invoke it’.This evolution of the function of set-off, from payment to guarantee of payment, is especially perceptible when one of the parties to the contract is subject to collective proceedings. In this context, the regime which may be attached to set-off will allow ‘the creditor to appropriate the debtor's claim against himself without having to fear any competition’.

This distinction in the function of set-off depending on whether the parties are in good standing or whether one of them is subject to collective proceedings has a particular echo in financial law, but also in conflict of laws: it explains why the law applicable to set-off is not the same when the parties are in good standing and when one of the parties is subject to collective proceedings.Before examining this question, it should be noted that the law applicable to netting now depends on whether the financial contract is subject to the clearing obligation, i.e. the obligation to hedge with a clearing house. This is laid down in the EMIR regulation, the scope of which must first be defined (Section 1). In the event that the clearing obligation is applicable, the intervention of the clearing house leads to the application of a double original regime: on the one hand, it alters the law applicable to the financial contract and, on the other hand, it allows the financial contract to escape the law of collective procedures and resolution (Section 2).

The functioning of the financial market relies on the financial market manager and its members. The status of managers has already been discussed. It is now necessary to consider how market membership is acquired, and the relationships that members are likely to develop. Three relationships can be distinguished: with their clients, with other market members, and with the financial market manager. The regulation of these relationships does not follow a principle of symmetry: they are governed by heterogeneous sources, which do not have identical objectives, and are therefore subject to different conflicts of laws. In the past, the law of the financial market was applied indiscriminately to these different aspects. Today, it follows a twofold movement, which we will trace here. Firstly, the lex mercatus applies to relations with the financial market manager and to transactions concluded between market members. Its application is imperative, as it pursues the proper functioning of the financial market (Section 1). Secondly, the law of the financial market has for a long time extended to contracts concluded between members and their clients. Today, it has withdrawn from these contractual relationships, as the protection of clients is ensured by the professional status of members (Section 2).

Section 1. THE RELATIONSHIP BETWEEN THE FINANCIAL MARKET AND ITS MEMBERS

Access to the status of market member is decided by the market operator itself. This status gives rise to a number of obligations for which the member is accountable in order to allow the proper functioning of the financial market (§ 1). Once the status has been obtained, the market member has access to the trading system, which allows it to conclude transactions with other members. These transactions will be subject to the law of the financial market by application of the Rome I Regulation (§ 2).

In stating our intention to reconcile the rules of financial law and the rules of conflict of laws, we wanted to take advantage of the resulting synthesis to make a diagnosis of the discipline and possibly reveal its deficiencies. Two of them can be highlighted: the contradiction of the objectives of financial law and a complex relationship with common law. A general solution to these difficulties consists in precisely delimiting the interactions of financial law with the various branches of common law in order to account for the reasons why a specific objective justifies the enactment of a special rule. In this delimitation exercise, the methodology of private international law can provide valuable assistance. At the same time, it is intended to show the undeniable contributions of the international application of financial law to the theory of private international law.

Contradictory objectives. The tension that financial law rules are subject to is first of all exacerbated by the sometimes contradictory nature of the objectives they pursue, between the liberalism to which the matter aspires and the protection of investors that it requires. The implementation of commercial operations requires speed and security, which we agree justify the existence of derogatory solutions. However, these solutions may come up against the objective of investor protection, which is not necessarily satisfied with the freedom-responsibility pairing created by this first objective. In this respect, the current point of balance lies in the abundance of information that financial law requires issuers to provide in order to market their securities; it is not certain that this abundance truly allows for the protection of investors by enlightening their consent, unless, precisely, they are investment specialists. This is all the more true since only the latter are in a position to engage the civil liability of issuers who disseminate defective information by proving the causality between the latter and their investment decision or their investment advice. This means that other investors will be better protected by imposing rules of conduct on intermediaries to protect clients, together with prudential rules to ensure their solvency and integrity. The protection of the financial market itself, where financial instruments are admitted to it, is in principle ensured by the administrative and criminal liability of issuers and investors.

The existence of exceptions to the application of EU law. As a matter of principle, the provision of access to a market infrastructure by an operator on the territory of the Union requires, on the one hand, the establishment of a personalised entity and, on the other hand, the authorisation of the latter by an authority of a Member State. These two aspects entail the correlative application of European legislation as well as the competence of the local authorities.By way of exception, it is possible for the foreign operator to provide its service in the Union without establishing a subsidiary, either by setting up a branch or by acting under the freedom to provide investment services. Access to the territory of the Union by these two means does not take place in the same way depending on the market infrastructure (Section 1). This access is nevertheless always likely to be based on the method of equivalence of legislation. This method aims to facilitate cross-border relations between private persons. It is therefore subject to the tension inherent in the objectives of private international law, between coordination of legal orders and preservation of the social order of the forum (Section 2).

Section 1. ACCESS TO THE TERRITORY OF THE UNION

In principle, the relationship with the legislation of third countries is identical: national authorisation is required in order to provide services within the Union. However, it is through the exceptions to this principle that the singularities of each market infrastructure are felt. This is why we will successively study the access to the European territory of financial market managers (§ 1), central counterparties (§ 2), and foreign central depositories (§ 3).

If the study of positive law is to the jurist what fieldwork is to the sociologist, in the same way, domestic law is for the internationalist the raw material of his work. We sometimes tend to forget this, simply because private international law has its own objects of study, foremost among which are conflicts of law. The latter arise from a ‘founding antinomy’between, on the one hand, the division of the world into distinct legal orders since, as Niboyet pointed out, ‘each country must have a law adapted to its needs, and it is in diversity that true civilisation resides’and, on the other hand, the existence of international private relations.On the basis of this duality, private international law develops its own objectives, independent of domestic law, and sometimes contradictory: the coordination of legal orders, which is the basis of the conflict rule method,the true ‘medicine’ for conflicts of laws,and the preservation of their internal order, which is the basis of mechanisms derogating from the application of foreign law, so that international relations do not destabilise the social structure of state legal orders.The discipline draws its singularity from the pursuit of its aims through a methodological approach that can move away from domestic law, either because it leads to the multiplication of points of view that are foreign to it,or because it can be based on the structure of norms in order to deduce the appropriate method of resolution. Nevertheless, domestic law reappears, since the methods used have in common that they are based on its analysis in order to found the rule of jurisdiction or conflict on the legal centre of gravity of the relationship in question, according to the substantive considerations that it promotes.In other words, domestic law is primary in that it attempts to capture the raw fact giving rise to conflicts of law, and therefore constitutes the matrix of the conflict rules. This connection is particularly perceptible when the law of conflicts synthesises domestic law in order to constitute its own categoriesand to give legal institutions the appropriate international connecting factor. In so doing, it casts an original eye on the legislative bodies in question, often revealing their deficiencies.It is on this double exercise of synthesis and characterisation, on the one hand, and of connection, on the other hand, that the present thesis focuses in a field, financial law, where the method of the rule of conflict has not lost its vigour.

The preceding discussions have shown, in particular, how market infrastructures are connected to a legal order and how the law of the financial market is deployed by relying on the connecting factor of the trading platform. The following developments extend these reflections to the status of financial instruments. The influence of the law of the central depository and the clearing house on the proprietary status of financial securities and on the law applicable to financial contracts will be shown. This influence is independent of the financial market, simply because financial instruments can be provided independently of a financial market. The use of a financial market nevertheless implies the use of the services of the clearing house and the central depository as soon as a financial contract or the exchange of a security is concluded through a trading platform.

In the case of securities, the main difficulty today lies in the connecting factor to their proprietary effect. It will be shown that these difficulties, which have their roots in the thesis of the plurality of connections, should be resolved, both in the direct and indirect holding system, by a unitary solution of the conflict of laws. In the indirect holding system, this solution should be based on the connection of the securities settlement system itself (Title 1).

From the point of view of financial contracts, the law applicable to them sometimes suffers from uncertainty when purely domestic contracts or consumer contracts are involved. The difficulty facing the status of financial contracts is, however, less related to the determination of the lex contractus than to its reconciliation with the laws that affect the formation of the contract and its performance. It is in this latter respect that the law of the compensation system will most often extend its realm to the entire lex contractus (Title 2).

The rules of conflict are not identical from one system to another: while regulated markets are connected to the law of the seat of their manager, the systems subject to the Finality Directive use a connecting factor based on the law of autonomy. Such a criterion, designed for exchange contracts, does not allow an adjusted connecting factor of organisational contracts. This is one of the reasons why, on the one hand, trading systems should all be subject to the law of the seat of their manager (Section 1) and, on the other hand, the connecting factor of systems subject to the Finality Directive appears unsatisfactory (Section 2).

Section 1. THE LAW APPLICABLE TO TRADING SYSTEMS

We will present here the solution of the MiFID 2 Directive, applicable only to regulated markets (§ 1), before showing the reasons which push for its analogical extension to all trading systems (§ 2).

§ 1. THE APPLICATION TO REGULATED MARKETS OF THE LAW OF THE SEAT OF THE MANAGER

The MiFID 2 solution. Article 44(4) of the MiFID 2 Directivecontains a conflict rule for regulated markets which states: ‘Without prejudice to any relevant provisions of Regulation (EU) No 596/2014 or of Directive 2014/57/EU, the public law governing the trading conducted under the systems of the regulated market shall be that of the home Member State of the regulated market. ‘

The home Member State of the regulated market is defined by Article 2(55)(b) of MiFID 2 as ‘the Member State in which the regulated market is registered or, if under national law it has no registered office, the Member State in which the head office of the regulated market is situated’. This ambivalent rule requires several clarifications.

Diversity of systems. In the context of market infrastructures, the notion of system refers to four varieties: trading systems, clearing systems, securities settlement systems and payment systems.These systems have distinct regimes depending on their purpose, which requires a closer look at their respective functioning (Section 1), before showing that they have in common that they are contracts (Section 2).

Section 1. MARKET INFRASTRUCTURE SYSTEMS

The different systems will be presented according to their sources. Indeed, while the law on trading systems originates from MiFID 2 (§ 1), the law on payment, clearing and settlement systems originates from the Finality Directive (§ 2). However, there is no common regime for the supervision of systems (§ 3).

§ 1. TRADING SYSTEMS

Notion of trading systems. Among the different varieties, trading systems are the most important in that they constitute the financial market in the strict sense of the term: they organise trading and determine the price of transactions. It should be noted that there are different ways of matching orders and, consequently, different categories of trading platforms: regulated markets, multilateral trading facilities and organised trading systems.Despite this diversity, the unity of the notion of trading platform stems from the fact that they always constitute a multilateral system. MiFID 2 defines the latter concept as ‘a system or arrangement within which multiple third-party buying and selling interests in financial instruments may interact’.In addition to this first criterion, which is based on the system's function, there is a second criterion that is specific to the manager's role in these negotiations.Indeed, for a market to be qualified as a ‘multilateral system’, case law states that the manager must not intervene in a personal capacity in the negotiations.This common function of organising the negotiations and the manager's independence, however, leaves a great deal of room for the different ways of organising the negotiations, which is reflected in the scope of these rules.

European managers of financial infrastructures are licensed under the law of their registered office. This affiliation dictates not only the local application of company law, but also of prudential and insolvency law. The particularity of infrastructure managers is that they are subject to an administrative connecting factor, which may be with the authority of a Member State, according to a decentralised coordination model, or directly with an EU agency, according to a centralised model (Chapter 1). As a matter of principle, the provision of access to a market infrastructure on the territory of the Union triggers the applicability of European law; by way of exception, it is possible for certain third-country operators to be subject only to the law of their headquarters. This limitation of European law is then based on the equivalence method. However, it should be noted that this method is not the only mechanism for self-limitation of local law and that the objectives of substantive law may lead to the eviction of all forms of self-limitation of European law when the provision of clearing services on its territory is at stake (Chapter 2).

Regime of the notion of system. Market infrastructures are systems, which have in common that they consist of a legal element, the rules of the system, and a physical element, the computer system. The most emblematic systems are trading systems, referred to as trading platforms, of which the topical example is the regulated market and whose lower forms are multilateral trading facilities and organised trading systems. This classification as a trading platform has a number of consequences: not only does it entail the application of a specific regime for its manager and for the members of the system, as provided for in MiFID 2, but it also entails a special regime for investors. In fact, the qualification of a regulated market makes applicable, for those who make use of this infrastructure, the legislative package constituted by the Transparency, Takeover and Market Abuse Directives, i.e. it dictates the regime to which investors wishing to conclude market transactions are subject. This explains why, from an international point of view, the connecting factor of the trading platform to the regulation of market operations is possible.

A specific regime is also attached to the qualification of a system within the meaning of the Finality Directive, i.e. to the qualification of clearing, securities settlement and money settlement systems. Indeed, the Finality Directive gives transactions using these systems a definitive character: collective proceedings can no longer call into question the operation. However, the use of the latter systems can be imposed. This is, first of all, the case for people who wish to use the financial market, including the issuer. If the issuer wishes to admit its securities to trading on a financial market, it is obliged by the market rules to deposit them with a central security depository (CSD). The use of these systems can also be imposed independently of the use of a financial market: private persons wishing to conclude an OTC financial contract subject to the clearing obligation will thus have to use a clearing house.

Defects of consent are part of the general protection afforded to contracting parties in French law. These conditions of validity are subject by the Rome I Regulation to the lex contractus.However, the formation of the contract is likely to be disrupted by the application of certain rules traditionally excluded from the domain of the law of contract, either in order to protect the persons concluding financial contracts or in order to protect the underlying asset affected by the conclusion of the financial contract. These rules can be divided into two sets. The first set consists of legislation on the capacity of persons.In French law, however, these do not interfere much with the conclusion of financial contracts, as the enactment of an incapacity regime has more disadvantages than advantages (Section 1). This is why French law favours a second set of rules, relating to the marketing of financial contracts, to ensure the protection of its residents (Section 2). The rules relating to the protection of the underlying are intended to prevent the financial contract, thanks to the rule of autonomy which characterises it, from constituting for the parties an instrument for circumventing the rules applicable to the underlying (Section 3).

Section 1. THE CAPACITY

On the face of it, French law provides for a measured regime of incapacity that tends to promote the hedging function of the financial contract while preventing it from being used for speculative purposes; on reflection, however, the criterion of speculative intent appears dysfunctional (§ 1). In relation to financial contracts, the enactment of an incapacity regime is tantamount to an incapacity of enjoyment (incapacité de jouissance), not of exercise (incapacité d’exercice): when applicable to legal persons, the regime should be aimed at the ability to contract (§ 2).