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
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.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
Section 1. Section 8110(b) introductory paragraph, (e), (f)
and (g) of Title 13 of the Pennsylvania Consolidated Statutes,
added July 1, 2024 (P.L.430, No.41), are amended to read:
§ 8110. Applicability; choice of law.
* * *
(b) When local law of securities intermediary's jurisdiction
governs.--The [local law of the securities intermediary's
jurisdiction, as specified in subsection (e),] law of this
Commonwealth governs:
* * *
[(e) Determination of "securities intermediary's
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jurisdiction".--The following rules determine a "securities
intermediary's jurisdiction" for purposes of this section:
(1) If an agreement between the securities intermediary
and its entitlement holder governing the securities account
expressly provides that a particular jurisdiction is the
securities intermediary's jurisdiction for purposes of this
chapter, this division or this title, that jurisdiction is
the securities intermediary's jurisdiction.
(2) If paragraph (1) does not apply and an agreement
between the securities intermediary and its entitlement
holder governing the securities account expressly provides
that the agreement is governed by the law of a particular
jurisdiction, that jurisdiction is the securities
intermediary's jurisdiction.
(3) If neither paragraph (1) nor paragraph (2) applies
and an agreement between the securities intermediary and its
entitlement holder governing the securities account expressly
provides that the securities account is maintained at an
office in a particular jurisdiction, that jurisdiction is the
securities intermediary's jurisdiction.
(4) If none of the preceding paragraphs applies, the
securities intermediary's jurisdiction is the jurisdiction in
which the office identified in an account statement as the
office serving the entitlement holder's account is located.
(5) If none of the preceding paragraphs applies, the
securities intermediary's jurisdiction is the jurisdiction in
which the chief executive office of the securities
intermediary is located.
(f) Factors not used to determine securities intermediary's
jurisdiction.--A securities intermediary's jurisdiction is not
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determined by the physical location of certificates representing
financial assets, or by the jurisdiction in which is organized
the issuer of the financial asset with respect to which an
entitlement holder has a security entitlement, or by the
location of facilities for data processing or other record
keeping concerning the account.]
(g) When local law of issuer's or securities intermediary's
jurisdiction governs.--The local law of the issuer's
jurisdiction [or the securities intermediary's jurisdiction]
governs a matter or transaction specified in subsection (a) [or
(b)] even if the matter or transaction does not bear any
relation to the jurisdiction.
Section 2. Sections 8503(a), 8511 and 9305(a)(3) of Title 13
are amended to read:
§ 8503. Property interest of entitlement holder in financial
asset held by securities intermediary.
(a) General rule.--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 8511 (relating to priority among
security interests and entitlement holders).]
* * *
§ 8511. Priority among security interests and entitlement
holders.
[(a) General rule.--Except as otherwise provided in
subsections (b) and (c), if] If a securities intermediary does
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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) When creditor of securities intermediary has control
over financial asset.--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) Clearing corporations.--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.]
§ 9305. Law governing perfection and priority of security
interests in investment property.
(a) Governing law; general rules.--Except as otherwise
provided in subsection (c), the following rules apply:
* * *
(3) The [local law of the securities intermediary's
jurisdiction as specified in section 8110(e)] law of this
Commonwealth governs perfection, the effect of perfection or
nonperfection and the priority of a security interest in a
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security entitlement or securities account.
* * *
Section 3. This act shall take effect in 60 days.
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