AN ACT to amend Tennessee Code Annotated, Title 47, relative to the Uniform Commercial Code.
Summary
HB2611 amends Tennessee’s Uniform Commercial Code provisions in Title 47 dealing with securities intermediaries, entitlement holders, and commodity intermediaries. The bill changes the governing law for certain securities intermediary matters to Tennessee law, removes now-outdated subsections in § 47-8-110, revises a priority rule in § 47-8-503, and replaces § 47-8-511 with a new rule stating that if a securities intermediary lacks enough of a financial asset to satisfy both entitlement holders and a creditor with a security interest, the entitlement holders’ claims have priority over the creditor’s claim.
The bill also updates § 47-9-305 to specify that the local law of the commodity intermediary’s jurisdiction governs perfection, the effect of perfection or nonperfection, and priority for security interests in commodity contracts and commodity accounts. The act is set to take effect July 1, 2026.
Impact
If enacted, the bill would modify Tennessee’s commercial and secured-transactions law by clarifying choice-of-law rules and priority rules for securities and commodity accounts under the UCC. It would affect securities intermediaries, commodity intermediaries, entitlement holders, secured creditors, and parties with interests in financial assets, while aligning Tennessee statutory language with the bill’s revised priority framework and jurisdictional rules.
Sentiment
The available voting history suggests limited support in committee, as the bill failed 2-5 in the House Banking and Consumer Affairs Subcommittee. No committee transcript is available, so the record does not show detailed debate, but the vote indicates the measure was not broadly favored at that stage.
Contention
The main likely point of contention is the bill’s reallocation of priority between entitlement holders and a creditor with a security interest in a financial asset, which could disadvantage secured creditors in some circumstances. Another possible issue is the shift in governing law for securities intermediary matters to Tennessee law and the deletion of existing subsections, which may have raised concerns about consistency with current UCC practice or the effect on financial institutions and secured lending arrangements.