Account Control Agreement

Account Control Agreements are used with securities accounts for establishing a security interest. It is designed to meet the Uniform Commercial Code (UCC) requirements. It is used for perfecting a security interest of a party.

Description

Article 9 of the UCC allows for Account Control Agreements to be used in perfecting security interests. It is an agreement between a debtor, creditor and debtor's securities intermediary. Perfecting a security interest means protecting the security from claims by other parties.

Purpose

A customer grants a creditor a security interest in a broker-maintained security account. This is done by using an Account Control Agreement and is designed to perfect a creditor's security interest, or protects the security interest.

Details

An Account Control Agreement contains the names of all three parties involved. It explains the terms and conditions of the agreement as well as the indemnity clauses, warranties and severability issues. It also explains how the agreement works, along with each party's obligations.

References

• Aba Net: A Model "Account Control Agreement" under Revised Article 9 of the Uniform Commercial Code
• Practical Law Company: Securities Account Control Agreement
• Real Deal Docs: Account Control Agreement
• Business Dictionary: Perfected Security Interest