HB 5174

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
(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
[(1)  acquisition of a security entitlement from the
[(2)  the rights and duties of the securities
intermediary and entitlement holder arising out of a security
[(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
(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
SECTION 3.  Section 8.511, Business & Commerce Code, is
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
[(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
[(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
(a)  Except as otherwise provided in Subsection (c), the
(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
(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
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
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
SECTION 8.  This Act takes effect September 1, 2025.