The Taxonomy of Global Securities: is the U.S. Definition of a Security too Broad?

Mazando, Frederick H. C. | January 1, 2012

This Article gives a fresh perspective on the perennial issue of the dearth of effective global securities rules. It argues that the disparate global securities definitions are a critical, but often overlooked, issue in global securities regulations. After all, the global trade in securities developed and grew exponentially in the last three decades without a securities treaty or effective global securities rules largely because there is no global consensus on what securities are or how best to regulate them. The stark differences between the U.S. Definition of a “security” and its foreign counterparts inspired this Article. Accordingly, it singles out and holistically compares the notoriously broad U.S. federal securities laws definition of a “security” with its foreign counterparts in four major global financial jurisdictions. In doing so, this Article illustrates the nature and extent of the disparate global securities definitions. Furthermore, this Article highlights areas of harmonizing global securities definitions. It concludes that the U.S. Definition is too broad, rigid, and obsolete relative to its foreign counterparts, recent global financial market developments, and trends in global securities definitions. Finally, it offers a harmonized U.S. Definition of a “security.”