The Inverted Pyramid of Wire Transfer Law

Abstract

New domestic and international funds transfer statutes have been adopted, but there is no generally accepted understanding of the purpose of these laws even though they govern the movement of roughly two trillion dollars every day. This Article puts forth a theory of funds transfer law, arguing that it should serve the interests of participants in domestic and international financial markets and contribute to the growth and development of internationally competitive financial centers. This theory is articulated through an inverted pyramid consisting of funds transfer law, funds transfer systems, clearing and settlement arrangements, and trading activity. This theory represents a departure from the traditional legal approach to financial markets, which focuses on securities regulation and baking law to the exclusion of critical commercial law matters such as funds transfers.