N.Y. UCC Law § 9-409

Section 9--409. Restrictions on Assignment of Letter-of-credit Rights\n Ineffective.\n (a) Term or law restricting assignment generally ineffective. A term\nin a letter-of-credit or a rule of law, statute, regulation, custom, or\npractice applicable to the letter of credit which prohibits, restricts,\nor requires the consent of an applicant, issuer, or nominated person to\na beneficiary's assignment of or creation of a security interest in a\nletter-of-credit right is ineffective to the extent that the term or\nrule of law, statute, regulation, custom, or practice:\n (1) would impair the creation, attachment, or perfection of a\n security interest in the letter-of-credit right; or\n (2) provides that the assignment or the creation, attachment, or\n perfection of the security interest may give rise to a\n default, breach, right of recoupment, claim, defense,\n termination, right of termination, or remedy under the\n letter-of-credit right.\n (b) Limitation on ineffectiveness under subsection (a). To the extent\nthat a term in a letter-of-credit is ineffective under subsection (a)\nbut would be effective under law other than this article or a custom or\npractice applicable to the letter-of-credit, to the transfer of a right\nto draw or otherwise demand performance under the letter-of-credit, or\nto the assignment of a right to proceeds of the letter-of-credit, the\ncreation, attachment, or perfection of a security interest in the\nletter-of-credit right:\n (1) is not enforceable against the applicant, issuer, nominated\n person, or transferee beneficiary;\n (2) imposes no duties or obligations on the applicant, issuer,\n nominated person, or transferee beneficiary; and\n (3) does not require the applicant, issuer, nominated person, or\n transferee beneficiary to recognize the security interest,\n pay or render performance to the secured party, or accept\n payment or other performance from the secured party.\n