70A-8-504 - Duty of securities intermediary to maintain financial asset.
70A-8-504. Duty of securities intermediary to maintain financial asset.
(1) A securities intermediary shall promptly obtain and thereafter maintain a financialasset in a quantity corresponding to the aggregate of all security entitlements it has established infavor of its entitlement holders with respect to that financial asset. The securities intermediarymay maintain those financial assets directly or through one or more other securitiesintermediaries.
(2) Except to the extent otherwise agreed by its entitlement holder, a securitiesintermediary may not grant any security interests in a financial asset it is obligated to maintainpursuant to Subsection (1).
(3) A securities intermediary satisfies the duty in Subsection (1) if:
(a) the securities intermediary acts with respect to the duty as agreed upon by theentitlement holder and the securities intermediary; or
(b) in the absence of agreement, the securities intermediary exercises due care inaccordance with reasonable commercial standards to obtain and maintain the financial asset.
(4) This section does not apply to a clearing corporation that is itself the obligor of anoption or similar obligation to which its entitlement holders have security entitlements.
Enacted by Chapter 204, 1996 General Session