8. "Entitlement order." This term is defined as a notification communicated to a securities intermediary directing transfer or redemption of the financial asset to which an entitlement holder has a security entitlement. The term is used in the rules for the indirect holding system in a fashion analogous to the use of the terms "indorsement" and "instruction" in the rules for the direct holding system. If a person directly holds a certificated security in registered form and wishes to transfer it, the means of transfer is an indorsement. If a person directly holds an uncertificated security and wishes to transfer it, the means of transfer is an instruction. If a person holds a security entitlement, the means of disposition is an entitlement order. An entitlement order includes a direction under Section 8-508 [Maine cite section 8-1508] to the securities intermediary to transfer a financial asset to the account of the entitlement holder at another financial intermediary or to cause the financial asset to be transferred to the entitlement holder in the direct holding system (e.g., the delivery of a securities certificate registered in the name of the former entitlement holder). As noted in Comment 7, an entitlement order need not be initiated by the entitlement holder in order to be effective, so long as the entitlement holder has authorized the other party to initiate entitlement orders. See Section 8-107(b) [Maine cite section 8-1107].

Sec. B-20. 11 MRSA §8-1103, sub-§(6), as enacted by PL 1997, c. 429, Pt. B, §2, is amended to read:

(6) A commodity contract, as defined in section 9-115 9-1102, subsection (15), is not a security or a financial asset.

Sec. B-21. 11 MRSA §8-1106, sub-§§(4) and (6), as enacted by PL 1997, c. 429, Pt. B, §2, are amended to read:

(4) A purchaser has control of a security entitlement if:

(a) The purchaser becomes the entitlement holder; or

(b) The securities intermediary has agreed that it will comply with entitlement orders originated by the purchaser without further consent by the entitlement holder.; or

(c)__Another person has control of the security entitlement on behalf of the purchaser or, having previously acquired control of the security entitlement, acknowledges that it has control on behalf of the purchaser.

(6) A purchaser who has satisfied the requirements of subsection (3), paragraph (b) or subsection (4), paragraph (b) has control, even if the registered owner in the case of subsection (3), paragraph (b) or the entitlement holder in the case of subsection (4), paragraph (b) retains the right to make substitutions for the uncertificated security or security entitlement, to originate instructions or entitlement orders to the issuer or securities intermediary or otherwise to deal with the uncertificated security or security entitlement.

Official Comment

1. The concept of "control" plays a key role in various provisions dealing with the rights of purchasers, including secured parties. See Sections 8303 (protected purchasers); 8503(e) (purchasers from securities intermediaries); 8510 (purchasers of security entitlements from entitlement holders); 9-115(4) 9-314 [Maine cite section 9-1314] (perfection of security interests); 9-115(5) 9-328 [Maine cite section 9-1328] (priorities among conflicting security interests).

Obtaining "control" means that the purchaser has taken whatever steps are necessary, given the manner in which the securities are held, to place itself in a position where it can have the securities sold, without further action by the owner.

4. Subsection (d) specifies the means by which a purchaser can obtain control over of a security entitlement. Two Three mechanisms are possible, analogous to those provided in subsection (c) for uncertificated securities. Under subsection (d)(1), a purchaser has control if it is the entitlement holder. This subsection would apply whether the purchaser holds through the same intermediary that the debtor used, or has the securities position transferred to its own intermediary. Subsection (d)(2) provides that a purchaser has control if the securities intermediary has agreed to act on entitlement orders originated by the purchaser if no further consent by the entitlement holder is required.__Under subsection (d)(2), control may be achieved even though the transferor original entitlement holder remains listed as the entitlement holder. Finally, a purchaser may obtain control under subsection (d)(3) if another person has control and the person acknowledges that it has control on the purchaser's behalf.__ Control under subsection (d)(3) parallels the delivery of certificated securities and uncertificated