A Canadian Perspective On The Hague Securities Convention

On April 1, 2017, the Hague Convention on the Law Applicable to Certain Rights in Respect of Securities Held with an Intermediary (the "Convention") became effective in the United States. While Canada has not yet ratified the Convention, it is important for Canadian financing practitioners to become familiar with the new rules thereunder.

The Convention's primary objective is to provide for a uniform set of rules applicable to the determination of the law governing the perfection and priority of security interests encumbering security entitlements held in a securities account by a securities intermediary¹. While the Convention supersedes the conflict of laws rules of the Uniform Commercial Code ("UCC"), it has no effect on the substantive law that will apply once the choice of law determination has been made².