Report: The Use of Electronic Signatures in Authenticating Global Notes: 31 December 2020

In March 2020, governments around the world took action to stall the advent of the novel coronavirus (Covid-19) by implementing a range of “social distancing” rules.  These measures have meant that market participants may be unable to print and sign documents with “wet ink” in accordance with usual practice; there are additional complications if a witness is required.  These circumstances have brought into sharp focus an enduring question about the status of electronic execution in law.

An example of a key financial markets activity which, in normal circumstances, requires a “wet ink” signature is that of the signing, authentication and effectuation process for global notes.  For example, as far as standalone Eurobonds are concerned, a global note needs to be signed by the issuer and then delivered to the agent to authenticate. If the global is a “New Global Note”, a third step of effectuation is required by the common safekeeper.  “Wet ink” signatures have traditionally been required at all three stages.

In reaction to the new circumstances, and to facilitate the conduct of business as smoothly as possible, the FMLC understands that the International Central Securities Depositories (“ICSDs”) have suggested temporary amendments to their procedure which incorporate electronic signatures and include a requirement to check the legal validity of electronic signatures of global notes under the issuing laws of the global notes.  In this context, the FMLC has published this paper surveying the position of electronic signatures under the main jurisdictions which govern global notes.

Available as: PDF.