What exact text in UCC Article 8 do proponents want removed or rewritten, and how would proposed replacement language read?
Executive summary
Proponents seeking to remove or rewrite parts of UCC Article 8 generally target the provisions that create the “securities entitlement” regime and related “take‑free” and “control” mechanics—rules that, critics say, let intermediaries and third parties block an investor’s reclaiming of a certificated asset in insolvency or convert ownership into a bundle of contract rights (the “decomposition” critique) [1] [2]. The official 2022 Amendments altered Article 8 and added Article 12 to address digital assets and control/perfection consistency, but public advocacy groups and some commentators argue those changes do not go far enough and instead call for clearer property‑first language or repeal of the securities‑entitlement construct [3] [4] [5].
1. What proponents say is wrong with current Article 8: the target phrases and concepts
Critics point the finger at Article 8’s core structural language that defines and implements the “securities entitlement” and “financial asset” concepts—terms that convert an investor’s claim into a non‑possessory entitlement credited to a securities account and governed by intermediary agreements rather than by simple property title (the legal effect described as preventing an investor from revindicating the security in a broker’s bankruptcy) [1] [2]. Related targets include the “take‑free” rules and the statutory language that sets “control” and priority mechanics for perfection and priority of interests in securities accounts and, since 2022, in controllable electronic records—provisions critics say subordinate individual property rights to operational market practices [6] [7].
2. Which exact statutory text proponents want removed or rewritten (as reflected in debates and critiques)
The public materials in the record name these features functionally rather than quoting single lines of text: the statutory definitions and operative sections that create a securities entitlement and the attendant Part 5 control/perfection rules are the locus of complaint (the text establishing that a securities intermediary “holds” a financial asset for the entitlement holder and the sections describing “control” and “take‑free” protections) [8] [9] [2]. Advocacy materials characterize the offending language as the clauses that enable “decomposition” of ownership so that investors cannot simply treat the asset as theirs in the intermediary’s insolvency [1] [5]. The provided sources do not, however, reproduce an exact block quote of the specific lines that opponents say must be struck, nor do they supply a single consolidated redraft submitted to lawmakers in the public materials collected here [5] [3].
3. How replacement language would read — two competing models (what proponents propose vs. mainstream drafters)
One advocated approach (described by critics and think‑tank proposals) would remove or limit the securities‑entitlement construct and replace it with express property‑title language that preserves an investor’s right to vindicate ownership against an intermediary’s creditors—language that would state in plain terms that assets credited to an account are owned property, revindicable in insolvency unless a documented, voluntary transfer has occurred (critique and policy proposal summarized by Heartland and commentators) [5] [1]. By contrast, mainstream drafting embodied in the 2022 Amendments and commentary seeks to harmonize “control” and choice‑of‑law rules across Articles 8, 9 and new Article 12 and to clarify when digital assets may be treated as financial assets—an incremental, compatibility‑focused rewrite rather than an abolition of the entitlement model [3] [4] [7].
4. Practical wording examples and limits of the public record
Because the provided reporting and official materials describe the targets and policy aims rather than printing an authoritative substitute statute, the public record here does not contain an officially proposed replacement paragraph to cite as the proponents’ exact draft [5] [4]. As illustrative—not sourced legislative text—one might expect a pro‑property draft to add a sentence like: “Property in an instrument, certificated security, or financial asset credited to a securities account remains vested in the entitlement holder and may be reclaimed free of the account holder’s general creditors unless the entitlement holder has expressly agreed in a recorded written transfer” (this sentence is a hypothetical syntheses of reform goals and is not present in the cited materials) [1] [2]. By contrast, the actual 2022 amendments took the opposite tack of adding precise control/perfection and CER rules to integrate digital assets into the existing entitlement framework rather than supplanting it [4] [7].
5. Bottom line and where reporting stops
Discussion is therefore twofold in the sources: critics demanding that the entitlement/decomposition architecture be narrowed or converted into clearly revindicable property language (outlined by advocacy groups and law‑review critiques) and drafters favoring calibrated amendments to preserve market infrastructure while extending rules to digital assets [5] [3] [7]. The sources provided explain which broad provisions are in question and how the 2022 revisions moved the law, but they do not supply a single, exact snippet of statutory text that proponents universally demand to be deleted nor a unified, officially proposed replacement text in the public materials reviewed here [4] [5].