Article 8 Acquisition of financial instrument encumbered by statutory pledge in the ordinary course of trading

(1)

On settlement of a protected transaction an acquirer of a financial instrument which is encumbered property under a statutory pledge acquires it unencumbered by the statutory pledge, despite the consent mentioned in section 51(2) of the Act (property encumbered by statutory pledge: transfer by provider) not having been obtained.

(2)

For the purposes of paragraph (1), a “protected transaction” is one in which—

(a)

the provider ceases to have title to the financial instrument on settlement of the transaction,

(b)

the transaction is one—

(i)

to which the Uncertificated Securities Regulations 2001^f1 apply, and

(ii)

in relation to which a properly authenticated dematerialised instruction has been duly given for the purposes of regulation 35 of those Regulations, and

(iii)

the addressee of the properly authenticated dematerialised instruction—

(aa)

did not have actual notice of the statutory pledge when the addressee received the properly authenticated dematerialised instruction, or

(bb)

did have such notice but when the notice was received it was not practicable for the addressee to halt the process of the properly authenticated dematerialised instruction.

Annotations

Footnotes

f1: S.I. 2001/3755.