11 USC 741 - Definitions for this subchapter

U.S Code last checked for updates: Nov 22, 2024

§ 741.

Definitions for this subchapter

In this subchapter—

(1)

“Commission” means Securities and Exchange Commission;

(2)

“customer” includes—

(A)

entity with whom a person deals as principal or agent and that has a claim against such person on account of a security received, acquired, or held by such person in the ordinary course of such person’s business as a stockbroker, from or for the securities account or accounts of such entity—

(i)

for safekeeping;

(ii)

with a view to sale;

(iii)

to cover a consummated sale;

(iv)

pursuant to a purchase;

(v)

as collateral under a security agreement; or

(vi)

for the purpose of effecting registration of transfer; and

(B)

entity that has a claim against a person arising out of—

(i)

a sale or conversion of a security received, acquired, or held as specified in subparagraph (A) of this paragraph; or

(ii)

a deposit of cash, a security, or other property with such person for the purpose of purchasing or selling a security;

(3)

“customer name security” means security—

(A)

held for the account of a customer on the date of the filing of the petition by or on behalf of the debtor;

(B)

registered in such customer’s name on such date or in the process of being so registered under instructions from the debtor; and

(C)

not in a form transferable by delivery on such date;

(4)

“customer property” means cash, security, or other property, and proceeds of such cash, security, or property, received, acquired, or held by or for the account of the debtor, from or for the securities account of a customer—

(A)

including—

(i)

property that was unlawfully converted from and that is the lawful property of the estate;

(ii)

a security held as property of the debtor to the extent such security is necessary to meet a net equity claim of a customer based on a security of the same class and series of an issuer;

(iii)

resources provided through the use or realization of a customer’s debit cash balance or a debit item includible in the Formula for Determination of Reserve Requirement for Brokers and Dealers as promulgated by the Commission under the Securities Exchange Act of 1934; and

(iv)

other property of the debtor that any applicable law, rule, or regulation requires to be set aside or held for the benefit of a customer, unless including such property as customer property would not significantly increase customer property; but

(B)

not including—

(i)

a customer name security delivered to or reclaimed by a customer under section 751 of this title; or

(ii)

property to the extent that a customer does not have a claim against the debtor based on such property;

(5)

“margin payment” means payment or deposit of cash, a security, or other property, that is commonly known to the securities trade as original margin, initial margin, maintenance margin, or variation margin, or as a mark-to-market payment, or that secures an obligation of a participant in a securities clearing agency;

(6)

“net equity” means, with respect to all accounts of a customer that such customer has in the same capacity—

(A)

(i)

aggregate dollar balance that would remain in such accounts after the liquidation, by sale or purchase, at the time of the filing of the petition, of all securities positions in all such accounts, except any customer name securities of such customer; minus

(ii)

any claim of the debtor against such customer in such capacity that would have been owing immediately after such liquidation; plus

(B)

any payment by such customer to the trustee, within 60 days after notice under section 342 of this title, of any business related claim of the debtor against such customer in such capacity;

(7)

“securities contract”—

(A)

means—

(i)

a contract for the purchase, sale, or loan of a security, a certificate of deposit, a mortgage loan, any interest in a mortgage loan, a group or index of securities, certificates of deposit, or mortgage loans or interests therein (including an interest therein or based on the value thereof), or option on any of the foregoing, including an option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option, and including any repurchase or reverse repurchase transaction on any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such repurchase or reverse repurchase transaction is a “repurchase agreement”, as defined in section 101);

(ii)

any option entered into on a national securities exchange relating to foreign currencies;

(iii)

the guarantee (including by novation) by or to any securities clearing agency of a settlement of cash, securities, certificates of deposit, mortgage loans or interests therein, group or index of securities, or mortgage loans or interests therein (including any interest therein or based on the value thereof), or option on any of the foregoing, including an option to purchase or sell any such security, certificate of deposit, mortgage loan, interest, group or index, or option (whether or not such settlement is in connection with any agreement or transaction referred to in clauses (i) through (xi));

(iv)

any margin loan;

(v)

any extension of credit for the clearance or settlement of securities transactions;

(vi)

any loan transaction coupled with a securities collar transaction, any prepaid forward securities transaction, or any total return swap transaction coupled with a securities sale transaction;

(vii)

any other agreement or transaction that is similar to an agreement or transaction referred to in this subparagraph;

(viii)

any combination of the agreements or transactions referred to in this subparagraph;

(ix)

any option to enter into any agreement or transaction referred to in this subparagraph;

(x)

a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), or (ix), together with all supplements to any such master agreement, without regard to whether the master agreement provides for an agreement or transaction that is not a securities contract under this subparagraph, except that such master agreement shall be considered to be a securities contract under this subparagraph only with respect to each agreement or transaction under such master agreement that is referred to in clause (i), (ii), (iii), (iv), (v), (vi), (vii), (viii), or (ix); or

(xi)

any security agreement or arrangement or other credit enhancement related to any agreement or transaction referred to in this subparagraph, including any guarantee or reimbursement obligation by or to a stockbroker, securities clearing agency, financial institution, or financial participant in connection with any agreement or transaction referred to in this subparagraph, but not to exceed the damages in connection with any such agreement or transaction, measured in accordance with section 562; and

(B)

does not include any purchase, sale, or repurchase obligation under a participation in a commercial mortgage loan;

(8)

“settlement payment” means a preliminary settlement payment, a partial settlement payment, an interim settlement payment, a settlement payment on account, a final settlement payment, or any other similar payment commonly used in the securities trade; and

(9)

“SIPC” means Securities Investor Protection Corporation.

(Pub. L. 95–598, Nov. 6, 1978, 92 Stat. 2611; Pub. L. 97–222, § 8, July 27, 1982, 96 Stat. 237; Pub. L. 98–353, title III, § 482, July 10, 1984, 98 Stat. 382; Pub. L. 103–394, title V, § 501(d)(25), Oct. 22, 1994, 108 Stat. 4146; Pub. L. 109–8, title IX, § 907(a)(2), Apr. 20, 2005, 119 Stat. 173; Pub. L. 109–390, § 5(a)(3), Dec. 12, 2006, 120 Stat. 2697.)

cite as: 11 USC 741