KRS 355.8-504: Duties of securities intermediary to maintain financial asset.

(1) A securities intermediary shall promptly obtain and thereafter maintain a financial

asset in a quantity corresponding to the aggregate of all security entitlements it has

established in favor of its entitlement holders with respect to that financial asset.

The securities intermediary may maintain those financial assets directly or through

one or more other securities intermediaries.

(2) Except to the extent otherwise agreed by its entitlement holder, a securities

intermediary may not grant any security inte rests in a financial asset it is obligated

to maintain pursuant to subsection (1) of this section.

(3) A securities intermediary satisfies the duty in subsection (1) of this section if:

(a) The securities intermediary acts with respect to the duty as agreed upon by the

entitlement holder and the securities intermediary; or

(b) In the absence of agreement, the securities intermediary exercises due care in

accordance with reasonable commercial standards to obtain and maintain the

financial asset.

(4) This section does not apply to a clearing corporation that is itself the obligor of an

option or similar obligation to which its entitlement holders have security

entitlements.