02/27/1996 01:30 PM Senate L&C

                                                                               
 CHAIRMAN KELLY called the meeting to order at 1:30 p.m. and                   
 announced  SB 300  to be up for consideration.  SB 43 was rescheduled         
 to be heard on Thursday.                                                      
                                                                               
                                                                               
       SB 300 UNIFORM COMMERCIAL CODE:ART 8(SECURITIES)                      
                                                                               
 SENATOR KELLY informed committee members the Division of Banking              
 does not object to any of the provisions in SB 300.                           
                                                                               
 ART PETERSON, Uniform Law Commissioner, stated SB 300 was                     
 supported, drafted, and promulgated by the National Conference of             
 Commissioners on Uniform State Laws (NCCUSL).  Article 8 is based             
 on the 1909 Uniform Stock Transfer Act which was incorporated into            
 the UCC when it was developed in the 1950s and revised in 1977. SB
 amends Article 8.  However, some of the amendments on page 1              
 pertain to Article 1 of the UCC.  That material, as well as the               
 material following page 39, are compatibility amendments, therefore           
 the bulk of the bill is between pages 2 and 39.  It recognizes both           
 the technology, the increase in the number of people buying                   
 investments, and the development of a clearinghouse corporation               
 system of holding securities.  Because it is an indirect way of               
 holding securities, many of the traditional rules in Article 8 do             
 not apply.  Therefore, new material must be adopted to deal with a            
 variety of transfer questions that arise because of the indirect              
 relationship.                                                                 
                                                                               
 The main features of SB 300 are as follows.  It establishes                   
 consumer specific rights in one's securities account in                       
 relationship to brokers and dealers.  It enables customers to                 
 obtain credit secured by the securities account.  It makes it                 
 easier for broker/dealers to obtain secured credit on their                   
 accounts with the securities depositories.  It helps avoid a                  
 meltdown because broker/dealers cannot obtain credit when a market            
 crashes.  It gives creditors better control over collateral that              
 includes securities accounts.  It assures smoother function of                
 securities markets over the long term.  It reduces the prospect of            
 litigation over broker/dealer customer relationships.  It assures             
 that the transfer rules for securities will remain in state law               
 rather than federal regulation.  Last, it makes it easier and less            
 risky for people to invest through broker/dealers.                            
                                                                               
 There being no further testimony or questions on SB 300, SENATOR              
 KELLY announced it would be passed out on Thursday unless                     
 opposition to the bill is heard.