6 The Legal Nature of the International Bond Market

Subject(s):

Bonds — Securities clearing system — European Central Bank

The chapter explains the history of the international bond market, from its origins in the nineteenth century issues of loan stock, through the development of the Eurodollar market after World War II and the adoption of bonds as a way for corporate borrowers to access that market. It then discusses the evolution of the documentation used, paying particular attention to the concept of negotiability, which facilitated the ready transfer of bonds. It goes on to consider the idea of immobilization and the growth of securities clearing organizations. In this context, it considers recent developments in Europe, brought about by the requirements of the European Central Bank. The chapter then turns to an analysis of the legal relationships created by the structure of bonds and the way they are traded, and ends with a discussion of the move to the dematerialization of the market.