Okla. Stat. tit. 12A § 8-501
Okla. Stat. tit. 12A, § 8-501
Oklahoma Code Comment
All of Part 5, "Security Entitlements," is new. Consequently, there are no analogous or revised sections of former UCC Article 8 because Part 5 sets out new rules for the indirect holding system, which was not dealt with as such in the former statute. Former sub sections 8-313(1)(d) and (g) and Section 8-320 , which dealt with transfers in indirect holding, were omitted in the revision. See Official Revision Notes 1 and 2.
The key to the application of Part 5 is the existence of a "security entitlement," which in turn arises when a "financial asset" is credited to a "securities account." The term "securities account" clearly applies to the relationship between a clearing corporation (such as The Depository Trust Company) and its participants (broker-dealers and banks), a broker and its customers who own securities in street name through the broker, and a bank acting as securities custodian and its custodial customers. It does not apply, for example, to the relationship between a bank or other financial institution and its depositors, or between a trustee and the beneficiary of an ordinary trust, or between a corporation and holders of its shares, whether certificated or uncertificated.
A security entitlement is the package of rights that a person has against the person's own intermediary with respect to the positions carried in the person's securities account. That package of rights is not, as such, something that is traded. However, an entitlement holder can, for instance, grant a lender a security interest in a security entitlement.
In the typical case, a security entitlement will be created by the act of a securities intermediary (a clearing corporation, bank or broker) in crediting a financial asset to a person's securities account. See UCC § 8-501(b)(1). This is true regardless of whether the securities intermediary itself holds the financial asset. However, for example, if the securities intermediary holds as custodian a financial asset registered in a customer's name and not indorsed by the customer to the securities intermediary or in blank, then the customer is treated as holding the financial asset directly rather than as having a security entitlement. UCC § 8-501(d).
Issuance of securities does not create a security entitlement. See UCC § 8- 501(e). Therefore, the Part 5 rules do not apply, for example, to the relationship between a mutual fund and its shareholders, even though the fund is in a sense holding portfolio securities on behalf of fund shareholders, because mutual fund shares (typically uncertificated) are directly-held securities under Article 8.
Publicly-traded securities options issued and cleared through the Options Clearing Corporation ("OCC") are "financial assets," although not "securities." See UCC § 8-103(e). The OCC carries on its books the options positions of the brokerage firms which are clearing members of the OCC, and the clearing members in turn carry on their books the options positions of their customers. These securities option accounts are subject to the rules of Part 5. Commodities contracts are neither a security nor a financial asset, see UCC § 8-103(f), and the relationship between a customer and a commodity futures commission merchant is not subject to the rules of Part 5.
Prior Statutory Provisions:
Cf. pre-revision UCC §§ 8-313(1)(d) and (g); 8-320.