The Dutch Securities Giro Transfer Act (SGTA) was created in 1977 to protect securities account holders in the event of an intermediary's insolvency, in response to the 1966 Teixeira de Mattos bank bankruptcy where account holders lost their securities. The SGTA established a collective deposit system where securities are held collectively and not as part of an intermediary's assets, allowing direct recovery from the deposit in bankruptcy. It was amended in 2011 for further clarity. In conclusion, the SGTA protects account holders by ensuring their securities are not affected by an intermediary's insolvency.

1. How are securities accountholders currently
protected from an intermediary’s insolvency?
(assuming Dutch law applies)
A Financial Law presentation by Sheila Turabaz

2. -Teixeira de Mattos case
-The Dutch Securities Giro Transfer Act (“SGTA”) or Wet Giraal
Effectenverkeer
-Giro deposit and collective deposit
-The 2011 amendment of the SGTA
-Conclusion

3. -Existed from 1822 until 1966
-In 1966, bank filed for
bankruptcy: accountholders lost
their money & securities
-Securities transactions only
took place in physical form
-Banks didn’t keep track of each
individual share certificate
Isaac
Abraham Louis
TEIXEIRA DE MATTOS BANK

4. -Two clients, Peijnenburg and Mulder, tried to claim back
their securities but they needed to prove their ownership
-After providing the bankruptcy trustee
(faillissementscurator) with a document, the trustee asked
them if they knew which particular share and number they
had put in
-Peijnenburg and Mulder were unable to individualise their
securities because they couldn’t find their depository receipts
-Consequence: the Supreme Court (Hoge Raad) rules that
the securities were now part of the Teixeira de Mattos
bankruptcy’s estate Pijnenburg and Mulder lost their
securities.

5. - 1977, 11 years later since Teixeira de Mattos, creation of the Securities Giro
Transfer Act, also called, “Wet giraal effectenverkeer”.
- This act creates a direct ownership right for persons who could demonstrate
co-ownership but not individual ownership
-The SGTA securities pool is managed by the Dutch Central Securities
Depository (“CSD”), currently: Euroclear Netherlands) and Dutch banks. It
does not form a part of the assets of the CSD or of the banks.
-In case of bankruptcy: those holding securities with the participating
institution may recover their securities directly from the securities pool
the dutch securities giro transfer
act

6. -Goal: to protect owners of
securities in case of bankruptcy by
custodian bank
-How to accomplish? : The act
created a giro deposit (girodepot)
and a collective
deposit(verzameldepot)
-N.B: Legal fiction!
GIRO DEPOSIT AND
COLLECTIVE DEPOSIT

7. -Amended in 2011
-Legislator: need for clarity and legal certainty
-Impact on issuers of securities, investors and financial
institutions
-Individual bearer instruments will have to be replaced by a
global certificate or changed into registered instruments
before 1 January 2013
AMENDMENT SGTA

8. conclusion
-Securities accountholders are protected thanks to the
Securities Giro Transfer Act
-In case of bankruptcy: the bankruptcy trustee cannot touch
the securities in the collective deposit because they do not
form part of the bankrupt estate.
-Therefore: securities are not affected by an intermediary’s
insolvency

9. question:
Do you think that securities accountholders are sufficiently
protected against an intermediary’s insolvency, or do they
need more protection?

10. question:
Do you think that securities accountholders are sufficiently
protected against an intermediary’s insolvency, or do they
need more protection?