Chapter 7
Transfer of Securities and Perfection of Collateral
Just as the 1933, 1934, 1939, and two 1940 Acts reshaped the U.S. securities markets by delivering a comprehensive legal framework,1 model uniform laws developed by the Uniform Law Commissioners and implemented voluntarily by each of the 50 states delivered one legal structure for the transfer of securities (Article 8 of the Uniform Commercial Code) and one set of uniform rules for perfecting legal claims to collateral (Article 9 of the Uniform Commercial Code). When coupled with the Federal Bankruptcy Code and the Federal Securities Insurance Protection Act (SIPA), the governing body of law surrounding the U.S. securities markets has a high degree of cohesion.2
From a legal and risk perspective, the interwoven operation in the United States of Article 8 and Article 9 of the Uniform Commercial Code makes for an efficient securities transfer system and facilitates secured lending against investment securities. These statutes, as adopted by each state in the United States, fully recognize the modern indirect holding of securities by investors through one or more brokers or a bank. (Parenthetical citations to the Uniform Commercial Code are included in the following paragraphs for future reference or additional reading.3)
As securities intermediaries (as defined in Article 8-102), banks and brokers stand between the issuer of securities and the investor. In a world where physical certificates do not exist, the genius of ...
