89R1008 SRA-D     By: Hayes H.B. No. 5174       A BILL TO BE ENTITLED   AN ACT   relating to the law governing actions involving certain investment   securities and the priority and perfection of certain security   interests under the Uniform Commercial Code.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 8.110(b), Business & Commerce Code, is   amended to read as follows:          (b)  Except as otherwise provided by this section, the [The]   local law of the entitlement holder's [securities intermediary's]   jurisdiction[, as specified in Subsection (e),] governs all other   matters[:                [(1)  acquisition of a security entitlement from the   securities intermediary;                [(2)  the rights and duties of the securities   intermediary and entitlement holder arising out of a security   entitlement;                [(3)  whether the securities intermediary owes any   duties to an adverse claimant to a security entitlement; and                [(4)  whether an adverse claim can be asserted against   a person who acquires a security entitlement from the securities   intermediary or a person who purchases a security entitlement or   interest therein from an entitlement holder].          SECTION 2.  Section 8.503(a), Business & Commerce Code, is   amended to read as follows:          (a)  To the extent necessary for a securities intermediary to   satisfy all security entitlements with respect to a particular   financial asset, all interests in that financial asset held by the   securities intermediary are held by the securities intermediary for   the entitlement holders, are not property of the securities   intermediary, and are not subject to claims of creditors of the   securities intermediary[, except as otherwise provided in Section   8.511].          SECTION 3.  Section 8.511, Business & Commerce Code, is   amended to read as follows:          Sec. 8.511.  PRIORITY AMONG SECURITY INTERESTS AND   ENTITLEMENT HOLDERS. If [(a) Except as otherwise provided in   Subsections (b) and (c), if] a securities intermediary does not   have sufficient interests in a particular financial asset to   satisfy both its obligations to entitlement holders who have   security entitlements to that financial asset and its obligation to   a creditor of the securities intermediary who has a security   interest in that financial asset, the claims of entitlement   holders, other than the creditor, have priority over the claim of   the creditor.          [(b)  A claim of a creditor of a securities intermediary who   has a security interest in a financial asset held by a securities   intermediary has priority over claims of the securities   intermediary's entitlement holders who have security entitlements   with respect to that financial asset if the creditor has control   over the financial asset.          [(c)  If a clearing corporation does not have sufficient   financial assets to satisfy both its obligations to entitlement   holders who have security entitlements with respect to a financial   asset and its obligation to a creditor of the clearing corporation   who has a security interest in that financial asset, the claim of   the creditor has priority over the claims of entitlement holders.]          SECTION 4.  Section 9.305(a), Business & Commerce Code, is   amended to read as follows:          (a)  Except as otherwise provided in Subsection (c), the   following rules apply:                (1)  While a security certificate is located in a   jurisdiction, the local law of that jurisdiction governs   perfection, the effect of perfection or nonperfection, and the   priority of a security interest in the certificated security   represented thereby.                (2)  The local law of the issuer's jurisdiction as   specified in Section 8.110(d) governs perfection, the effect of   perfection or nonperfection, and the priority of a security   interest in an uncertificated security.                (3)  [The local law of the securities intermediary's   jurisdiction as specified in Section 8.110(e) governs perfection,   the effect of perfection or nonperfection, and the priority of a   security interest in a security entitlement or securities account.                [(4)]  The local law of the commodity intermediary's   jurisdiction governs perfection, the effect of perfection or   nonperfection, and the priority of a security interest in a   commodity contract or commodity account.          SECTION 5.  Sections 8.110(e) and (f), Business & Commerce   Code, are repealed.          SECTION 6.  The changes in law made to Section 8.110,   Business & Commerce Code, apply only to an action filed or   proceeding commenced on or after the effective date of this Act.  An   action filed or proceeding commenced before the effective date of   this Act is governed by the law in effect immediately before the   effective date of this Act, and that law is continued in effect for   that purpose.          SECTION 7.  The changes in law made by this Act to Sections   8.511 and 9.305(a), Business & Commerce Code, apply only to a   security interest that attaches on or after the effective date of   this Act.  A security interest that attaches before the effective   date of this Act is governed by the law in effect immediately before   the effective date of this Act, and that law is continued in effect   for that purpose.          SECTION 8.  This Act takes effect September 1, 2025.