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A BILL TO BE ENTITLED
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AN ACT
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relating to the law governing actions involving certain investment |
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securities and the priority and perfection of certain security |
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interests under the Uniform Commercial Code. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Section 8.110(b), Business & Commerce Code, is |
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amended to read as follows: |
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(b) Except as otherwise provided by this section, the [The] |
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local law of the entitlement holder's [securities intermediary's] |
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jurisdiction[, as specified in Subsection (e),] governs all other |
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matters[: |
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[(1) acquisition of a security entitlement from the |
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securities intermediary; |
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[(2) the rights and duties of the securities |
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intermediary and entitlement holder arising out of a security |
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entitlement; |
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[(3) whether the securities intermediary owes any |
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duties to an adverse claimant to a security entitlement; and |
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[(4) whether an adverse claim can be asserted against |
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a person who acquires a security entitlement from the securities |
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intermediary or a person who purchases a security entitlement or |
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interest therein from an entitlement holder]. |
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SECTION 2. Section 8.503(a), Business & Commerce Code, is |
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amended to read as follows: |
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(a) To the extent necessary for a securities intermediary to |
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satisfy all security entitlements with respect to a particular |
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financial asset, all interests in that financial asset held by the |
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securities intermediary are held by the securities intermediary for |
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the entitlement holders, are not property of the securities |
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intermediary, and are not subject to claims of creditors of the |
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securities intermediary[, except as otherwise provided in Section |
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8.511]. |
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SECTION 3. Section 8.511, Business & Commerce Code, is |
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amended to read as follows: |
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Sec. 8.511. PRIORITY AMONG SECURITY INTERESTS AND |
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ENTITLEMENT HOLDERS. If [(a) Except as otherwise provided in |
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Subsections (b) and (c), if] a securities intermediary does not |
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have sufficient interests in a particular financial asset to |
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satisfy both its obligations to entitlement holders who have |
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security entitlements to that financial asset and its obligation to |
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a creditor of the securities intermediary who has a security |
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interest in that financial asset, the claims of entitlement |
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holders, other than the creditor, have priority over the claim of |
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the creditor. |
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[(b) A claim of a creditor of a securities intermediary who |
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has a security interest in a financial asset held by a securities |
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intermediary has priority over claims of the securities |
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intermediary's entitlement holders who have security entitlements |
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with respect to that financial asset if the creditor has control |
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over the financial asset. |
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[(c) If a clearing corporation does not have sufficient |
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financial assets to satisfy both its obligations to entitlement |
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holders who have security entitlements with respect to a financial |
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asset and its obligation to a creditor of the clearing corporation |
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who has a security interest in that financial asset, the claim of |
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the creditor has priority over the claims of entitlement holders.] |
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SECTION 4. Section 9.305(a), Business & Commerce Code, is |
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amended to read as follows: |
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(a) Except as otherwise provided in Subsection (c), the |
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following rules apply: |
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(1) While a security certificate is located in a |
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jurisdiction, the local law of that jurisdiction governs |
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perfection, the effect of perfection or nonperfection, and the |
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priority of a security interest in the certificated security |
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represented thereby. |
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(2) The local law of the issuer's jurisdiction as |
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specified in Section 8.110(d) governs perfection, the effect of |
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perfection or nonperfection, and the priority of a security |
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interest in an uncertificated security. |
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(3) [The local law of the securities intermediary's |
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jurisdiction as specified in Section 8.110(e) governs perfection, |
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the effect of perfection or nonperfection, and the priority of a |
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security interest in a security entitlement or securities account. |
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[(4)] The local law of the commodity intermediary's |
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jurisdiction governs perfection, the effect of perfection or |
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nonperfection, and the priority of a security interest in a |
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commodity contract or commodity account. |
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SECTION 5. Sections 8.110(e) and (f), Business & Commerce |
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Code, are repealed. |
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SECTION 6. The changes in law made to Section 8.110, |
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Business & Commerce Code, apply only to an action filed or |
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proceeding commenced on or after the effective date of this Act. An |
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action filed or proceeding commenced before the effective date of |
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this Act is governed by the law in effect immediately before the |
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effective date of this Act, and that law is continued in effect for |
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that purpose. |
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SECTION 7. The changes in law made by this Act to Sections |
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8.511 and 9.305(a), Business & Commerce Code, apply only to a |
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security interest that attaches on or after the effective date of |
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this Act. A security interest that attaches before the effective |
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date of this Act is governed by the law in effect immediately before |
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the effective date of this Act, and that law is continued in effect |
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for that purpose. |
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SECTION 8. This Act takes effect September 1, 2025. |