Finance is legally constructed; it does not stand outside the law. Financial assets
are contracts the value of which depends in large part on their legal vindication. Which financial assets will or will not be vindicated is a function of legal rules and their interpretation by courts and regulators. This may vary from legal system to legal system. In a world of free capital flows, legally enforceable financial commitments that link market participants from different countries and legal systems to one another determine the scope of the financial system. The ability to design instruments that are not obviously in conflict with existing rules in different jurisdictions even as they seek to mitigate their costs on the issuers or holders renders a comparative advantage. In short, law and finance are locked into a dynamic process in which the rules that establish the game are continuously challenged by new contractual devices, which in turn seek legal vindication.