HB 1276 — An Act amending Title 13 (Commercial Code) of the Pennsylvania Consolidated Statutes, in short title and general matters, further providing for applicability and choice of law; in security entitlements, further providing for property interest of entitlement holder in financial asset held by securities intermediary and for priority among security interests and entitlement holders; and, in perfection and priority, further providing for law governing perfection and priority of security interests in investment property.

PRINTER'S NO.   1429

                       THE GENERAL ASSEMBLY OF PENNSYLVANIA



                           HOUSE BILL
                           No. 1276
                                                 Session of
                                                   2025

     INTRODUCED BY D'ORSIE AND BERNSTINE, APRIL 21, 2025

     REFERRED TO COMMITTEE ON COMMERCE, APRIL 21, 2025


                                      AN ACT
 1   Amending Title 13 (Commercial Code) of the Pennsylvania
 2      Consolidated Statutes, in short title and general matters,
 3      further providing for applicability and choice of law; in
 4      security entitlements, further providing for property
 5      interest of entitlement holder in financial asset held by
 6      securities intermediary and for priority among security
 7      interests and entitlement holders; and, in perfection and
 8      priority, further providing for law governing perfection and
 9      priority of security interests in investment property.
10      The General Assembly of the Commonwealth of Pennsylvania
11   hereby enacts as follows:
12      Section 1.      Section 8110(b) introductory paragraph, (e), (f)
13   and (g) of Title 13 of the Pennsylvania Consolidated Statutes,
14   added July 1, 2024 (P.L.430, No.41), are amended to read:
15   § 8110.    Applicability; choice of law.
16      * * *
17      (b)    When local law of securities intermediary's jurisdiction
18   governs.--The [local law of the securities intermediary's
19   jurisdiction, as specified in subsection (e),] law of this
20   Commonwealth governs:
21             * * *
22      [(e)    Determination of "securities intermediary's
 1   jurisdiction".--The following rules determine a "securities
 2   intermediary's jurisdiction" for purposes of this section:
 3            (1)   If an agreement between the securities intermediary
 4      and its entitlement holder governing the securities account
 5      expressly provides that a particular jurisdiction is the
 6      securities intermediary's jurisdiction for purposes of this
 7      chapter, this division or this title, that jurisdiction is
 8      the securities intermediary's jurisdiction.
 9            (2)   If paragraph (1) does not apply and an agreement
10      between the securities intermediary and its entitlement
11      holder governing the securities account expressly provides
12      that the agreement is governed by the law of a particular
13      jurisdiction, that jurisdiction is the securities
14      intermediary's jurisdiction.
15            (3)   If neither paragraph (1) nor paragraph (2) applies
16      and an agreement between the securities intermediary and its
17      entitlement holder governing the securities account expressly
18      provides that the securities account is maintained at an
19      office in a particular jurisdiction, that jurisdiction is the
20      securities intermediary's jurisdiction.
21            (4)   If none of the preceding paragraphs applies, the
22      securities intermediary's jurisdiction is the jurisdiction in
23      which the office identified in an account statement as the
24      office serving the entitlement holder's account is located.
25            (5)   If none of the preceding paragraphs applies, the
26      securities intermediary's jurisdiction is the jurisdiction in
27      which the chief executive office of the securities
28      intermediary is located.
29      (f)   Factors not used to determine securities intermediary's
30   jurisdiction.--A securities intermediary's jurisdiction is not

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 1   determined by the physical location of certificates representing
 2   financial assets, or by the jurisdiction in which is organized
 3   the issuer of the financial asset with respect to which an
 4   entitlement holder has a security entitlement, or by the
 5   location of facilities for data processing or other record
 6   keeping concerning the account.]
 7      (g)    When local law of issuer's or securities intermediary's
 8   jurisdiction governs.--The local law of the issuer's
 9   jurisdiction [or the securities intermediary's jurisdiction]
10   governs a matter or transaction specified in subsection (a) [or
11   (b)] even if the matter or transaction does not bear any
12   relation to the jurisdiction.
13      Section 2.    Sections 8503(a), 8511 and 9305(a)(3) of Title 13
14   are amended to read:
15   § 8503.    Property interest of entitlement holder in financial
16                asset held by securities intermediary.
17      (a)    General rule.--To the extent necessary for a securities
18   intermediary to satisfy all security entitlements with respect
19   to a particular financial asset, all interests in that financial
20   asset held by the securities intermediary are held by the
21   securities intermediary for the entitlement holders, are not
22   property of the securities intermediary and are not subject to
23   claims of creditors of the securities intermediary.[, except as
24   otherwise provided in section 8511 (relating to priority among
25   security interests and entitlement holders).]
26      * * *
27   § 8511.    Priority among security interests and entitlement
28                holders.
29      [(a)    General rule.--Except as otherwise provided in
30   subsections (b) and (c), if] If a securities intermediary does

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 1   not have sufficient interests in a particular financial asset to
 2   satisfy both its obligations to entitlement holders who have
 3   security entitlements to that financial asset and its obligation
 4   to a creditor of the securities intermediary who has a security
 5   interest in that financial asset, the claims of entitlement
 6   holders other than the creditor have priority over the claim of
 7   the creditor.
 8      [(b)    When creditor of securities intermediary has control
 9   over financial asset.--A claim of a creditor of a securities
10   intermediary who has a security interest in a financial asset
11   held by a securities intermediary has priority over claims of
12   the securities intermediary's entitlement holders who have
13   security entitlements with respect to that financial asset if
14   the creditor has control over the financial asset.
15      (c)    Clearing corporations.--If a clearing corporation does
16   not have sufficient financial assets to satisfy both its
17   obligations to entitlement holders who have security
18   entitlements with respect to a financial asset and its
19   obligation to a creditor of the clearing corporation who has a
20   security interest in that financial asset, the claim of the
21   creditor has priority over the claims of entitlement holders.]
22   § 9305.    Law governing perfection and priority of security
23                   interests in investment property.
24      (a)    Governing law; general rules.--Except as otherwise
25   provided in subsection (c), the following rules apply:
26             * * *
27             (3)   The [local law of the securities intermediary's
28      jurisdiction as specified in section 8110(e)] law of this
29      Commonwealth governs perfection, the effect of perfection or
30      nonperfection and the priority of a security interest in a

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1     security entitlement or securities account.
2         * * *
3     Section 3.    This act shall take effect in 60 days.




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