Arizona Laws 47-8504. Duty of securities intermediary to maintain financial asset
A. A securities intermediary shall promptly obtain and thereafter maintain a financial asset in a quantity corresponding to the aggregate of all security entitlements it has established in favor of its entitlement holders with respect to that financial asset. The securities intermediary may maintain those financial assets directly or through one or more other securities intermediaries.
Terms Used In Arizona Laws 47-8504
- Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
- Corporation: A legal entity owned by the holders of shares of stock that have been issued, and that can own, receive, and transfer property, and carry on business in its own name.
- Entitlement: A Federal program or provision of law that requires payments to any person or unit of government that meets the eligibility criteria established by law. Entitlements constitute a binding obligation on the part of the Federal Government, and eligible recipients have legal recourse if the obligation is not fulfilled. Social Security and veterans' compensation and pensions are examples of entitlement programs.
- Entitlement holder: means a person identified in the records of a securities intermediary as the person having a security entitlement against the securities intermediary. See Arizona Laws 47-8102
- Financial asset: except as otherwise provided in section 47-8103, means:
(a) A security;
(b) An obligation of a person or a share, participation or other interest in a person or in property or an enterprise of a person, which is, or is of a type, dealt in or traded on financial markets, or which is recognized in any area in which it is issued or dealt in as a medium for investment; or
(c) Any property that is held by a securities intermediary for another person in a securities account if the securities intermediary has expressly agreed with the other person that the property is to be treated as a financial asset under this chapter. See Arizona Laws 47-8102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Securities intermediary: means :
(a) A clearing corporation; or
(b) A person, including a bank or broker, that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. See Arizona Laws 47-8102
- Security: except as otherwise provided in section 47-8103, means an obligation of an issuer or a share, participation or other interest in an issuer or in property or an enterprise of an issuer:
(a) Which is represented by a security certificate in bearer or registered form, or the transfer of which may be registered upon books maintained for that purpose by or on behalf of the issuer;
(b) Which is one of a class or series or by its terms is divisible into a class or series of shares, participations, interests or obligations; and
(c) Which:
(i) Is, or is of a type, dealt in or traded on securities exchanges or securities markets; or
(ii) Is a medium for investment and by its terms expressly provides that it is a security governed by this chapter. See Arizona Laws 47-8102
B. Except to the extent otherwise agreed by its entitlement holder, a securities intermediary may not grant any security interests in a financial asset it is obligated to maintain pursuant to subsection A.
C. A securities intermediary satisfies the duty in subsection A if:
1. The securities intermediary acts with respect to the duty as agreed upon by the entitlement holder and the securities intermediary; or
2. In the absence of agreement, the securities intermediary exercises due care in accordance with reasonable commercial standards to obtain and maintain the financial asset.
D. This section does not apply to a clearing corporation that is itself the obligor of an option or similar obligation to which its entitlement holders have security entitlements.