Chapter 1. The Geneva Securities Convention
The protection of an innocent acquirer plays a pivotal role in intermediated securities transactions, for despite massive and speedy securities transactions in the intermediated system, a purchaser of intermediated securities may have the legal certainty that her intermediated securities are not subject to any adverse claim, unless she had an actual or constructive notice of the fact that her acquisition could violate another’s interest. The innocent acquisition rule, thus, ensures settlement finality in the intermediated system, and facilitates dynamic safety of securities transactions. However, due to the special characteristics of intermediated securities transactions, such as book-entry transfers without physical securities deliveries, and anonymity of counterparties of transactions on a stock exchange in general, it was considered that the concept of the traditional so-called good faith acquisition or bona fide acquisition which is applied to a tangible property is not appropriate for intermediated securities transactions. In this respect, from the early stage the wording of innocent acquisition was selected, and the principle of the innocent acquisition protection was formulated with a neutral and fact-based structure.