Colorado Code
Part 3 - Perfection and Priority
§ 4-9-305. Law Governing Perfection and Priority of Security Interests in Investment Property

(1) If an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that a particular jurisdiction is the commodity intermediary's jurisdiction for purposes of this part 3, this article, or this title, that jurisdiction is the commodity intermediary's jurisdiction.
(2) If paragraph (1) of this subsection (b) does not apply and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the agreement is governed by the law of a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
(3) If neither paragraph (1) nor paragraph (2) of this subsection (b) applies and an agreement between the commodity intermediary and commodity customer governing the commodity account expressly provides that the commodity account is maintained at an office in a particular jurisdiction, that jurisdiction is the commodity intermediary's jurisdiction.
(4) If none of paragraphs (1), (2), and (3) of this subsection (b) applies, the commodity intermediary's jurisdiction is the jurisdiction in which the office identified in an account statement as the office serving the commodity customer's account is located.

(1) Perfection of a security interest in investment property by filing;
(2) Automatic perfection of a security interest in investment property created by a broker or securities intermediary; and
(3) Automatic perfection of a security interest in a commodity contract or commodity account created by a commodity intermediary.

Source: L. 2001: Entire article R&RE, p. 1343, § 1, effective July 1.
Editor's note: This section is similar to former § 4-9-103 (6) as it existed prior to 2001.

For commodity contracts and commodity accounts, the law of the commodity intermediary's jurisdiction governs, though if particular assets of this type qualify as securities held with an intermediary within the meaning of the Convention, the Convention would also apply. Commodity contracts and commodity accounts are not governed by Article 8, and for this reason subsection (b) contains rules that specify the commodity intermediary's jurisdiction that are analogous to the rules in Section 8-110(e) specifying a securities intermediary's jurisdiction. Subsection (b)(1) affords the parties greater flexibility than did former Section 9-103(6)(3). See also Section 9-304(b) (bank's jurisdiction); Revised Section 8-110(e)(1) and (2) (securities intermediary's jurisdiction).
The Hague Securities Convention generally preserves these rules for perfection by filing. However, if the debtor is located in a non-U.S. jurisdiction, or if the account agreement designates the law of a non-U.S. jurisdiction, then filing may be appropriate only in a different jurisdiction or altogether unavailable. See Convention articles 12(2)(b) and 4(1), respectively, and PEB Commentary No. 19, dated April 11, 2017, particularly footnote 25.
Example 1: A customer residing in New Jersey maintains a securities account with Able & Co. The agreement between the customer and Able specifies that it is governed by Pennsylvania law but expressly provides that California is Able's jurisdiction for purposes of the Uniform Commercial Code. Through the account the customer holds securities of a Massachusetts corporation, which Able holds through a clearing corporation located in New York. The customer obtains a margin loan from Able. Subsection (a)(3) provides that California law -- the law of the securities intermediary's jurisdiction -- governs perfection and priority of the security interest, even if California has no other relationship to the parties or the transaction. Even if other facts cause the Hague Securities Convention to apply (see Comment 1 to Section 8-110), the Convention does not change this result, provided that the account agreement either was entered into before the Convention's effectiveness in the United States or expressly specifies that the law of California is applicable to all issues specified in Convention article 2(1), and also provided that at the time of the agreement Able had an office in the United States engaged in a regular activity of maintaining securities accounts.
Example 2: A customer residing in New Jersey maintains a securities account with Able & Co. The agreement between the customer and Able specifies that it is governed by Pennsylvania law. Through the account the customer holds securities of a Massachusetts corporation, which Able holds through a clearing corporation located in New York. The customer obtains a loan from a lender located in Illinois. The lender takes a security interest and perfects by obtaining an agreement among the debtor, itself, and Able, which satisfies the requirement of Section 8-106(d)(2) to give the lender control. Subsection (a)(3) provides that Pennsylvania law -- the law of the securities intermediary's jurisdiction -- governs perfection and priority of the security interest, even if Pennsylvania has no other relationship to the parties or the transaction. Even if other facts cause the Hague Securities Convention to apply, the Convention does not change this result, provided that at the time of the agreement between the customer and Able, Able had an office in the United States engaged in a regular activity of maintaining securities accounts.
Example 3: A customer residing in New Jersey maintains a securities account with Able & Co. The agreement between the customer and Able specifies that it is governed by Pennsylvania law. Through the account, the customer holds securities of a Massachusetts corporation, which Able holds through a clearing corporation located in New York. The customer borrows from SP-1, and SP-1 files a financing statement in New Jersey. Later, the customer obtains a loan from SP-2. SP-2 takes a security interest and perfects by obtaining an agreement among the debtor, itself, and Able, which satisfies the requirement of Section 8-106(d)(2) to give SP-2 control. Subsection (c)(1) provides that perfection of SP-1's security interest by filing is governed by the location of the debtor, so the filing in New Jersey was appropriate. Even if other facts cause the Hague Securities Convention to apply, Convention article 12(2)(b) preserves this result. Subsection (a)(3), however, provides that Pennsylvania law -- the law designated by the agreement between the customer and Able -- governs all other questions of perfection and priority, and the Convention preserves this result, provided that at the time of the agreement between the customer and Able, Able had an office in the United States engaged in a regular activity of maintaining securities accounts. Thus, Pennsylvania law governs perfection of SP-2's security interest, and Pennsylvania law also governs the priority of the security interests of SP-1 and SP-2.
Example 4: A customer maintains a securities account with Able & Co. The customer is an Ontario, Canada corporation with its chief executive office in Toronto. The agreement between the customer and Able specifies that it is governed by New York law, and at the time of the agreement Able had an office in the United States engaged in a regular activity of maintaining securities accounts. The customer obtains a loan secured by the securities account, and the lender wishes to perfect by filing. Subsection (c)(1) provides that perfection of the security interest by filing is generally governed by the law of the location of the debtor (in this case Ontario, assuming that it has a filing system described by Section 9-307(c)); however, Convention article 12 (2)(b) recognizes Article 9's place-of-filing rules only when they designate a U.S. jurisdiction for the filing. As a result, subsection (c)(1) does not govern filing for this transaction, and perfection of the security interest is governed by the substantive law of the jurisdiction designated by the account agreement (in this case New York).
Example 5: A customer maintains a securities account with Able & Co. The customer is a Texas corporation. The agreement between the customer and Able specifies that it is governed by English law, and at the time of the agreement Able had an office in England engaged in a regular activity of maintaining securities accounts. The customer obtains a loan secured by the securities account, and the lender wishes to perfect by filing. Subsection (c)(1), if it applied, would provide that perfection of the security interest by filing is governed by the law of the location of the debtor (in this case Texas); however, under Convention article 4(1), perfection of the security interest is governed by the law of the jurisdiction designated by the account agreement (in this case England), rather than by the law of any UCC jurisdiction.