1-1 By: Bivins S.B. No. 736
1-2 (In the Senate - Filed March 9, 1993; March 10, 1993, read
1-3 first time and referred to Committee on Finance; March 24, 1993,
1-4 reported favorably by the following vote: Yeas 10, Nays 0;
1-5 March 24, 1993, sent to printer.)
1-6 COMMITTEE VOTE
1-7 Yea Nay PNV Absent
1-8 Montford x
1-9 Turner x
1-10 Armbrister x
1-11 Barrientos x
1-12 Bivins x
1-13 Ellis x
1-14 Haley x
1-15 Moncrief x
1-16 Parker x
1-17 Ratliff x
1-18 Sims x
1-19 Truan x
1-20 Zaffirini x
1-21 A BILL TO BE ENTITLED
1-22 AN ACT
1-23 relating to the buying and selling of crude oil and natural gas
1-24 commodity futures or options.
1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-26 SECTION 1. Section 404.0245, Government Code, is amended to
1-27 read as follows:
1-28 Sec. 404.0245. Crude Oil AND NATURAL GAS Futures Contracts.
1-29 (a) In this section, "hedging" means the buying and selling of
1-30 crude oil and natural gas commodity futures or <the buying of>
1-31 options on crude oil and natural gas commodity futures as a
1-32 protection against loss due to price fluctuations. Hedging at all
1-33 times shall comply with Commodity Futures Trading Commission
1-34 regulations.
1-35 (b) Subject to the limitations of Subsection (c), the board
1-36 may determine and designate the amount of state funds that shall be
1-37 invested by the treasurer in hedging transactions in crude oil and
1-38 natural gas futures contracts and options on crude oil and natural
1-39 gas futures contracts that are traded on an established exchange
1-40 regulated by the Securities and Exchange Commission or the
1-41 Commodity Futures Trading Commission.
1-42 (c) The principal amount of state funds invested and
1-43 outstanding in hedging transactions on any one day may not exceed
1-44 $500,000 with a maximum risk of loss of $5,000,000 <$2,500,000>.
1-45 The total principal amount of state funds that may be invested by
1-46 the state treasurer in hedging transactions during any one biennium
1-47 may not exceed the amount of money credited to the unclaimed money
1-48 fund for that biennium and attributable to the remittance of
1-49 mineral proceeds under Chapter 75, Property Code. Any premium
1-50 incurred in connection with hedging transactions may be paid only
1-51 from funds appropriated for that purpose.
1-52 (d) The board by rule shall regulate the investment of state
1-53 funds in crude oil and natural gas futures contracts or options on
1-54 crude oil and natural gas futures contracts. The rules shall
1-55 provide restrictions and procedures for making the investments that
1-56 persons of ordinary prudence, discretion, and intelligence,
1-57 exercising the judgment and care under the circumstances then
1-58 prevailing, would follow in the management of their own affairs,
1-59 not in regard to speculation but in regard to the permanent
1-60 disposition of their funds, considering the probable income as well
1-61 as the probable safety of their capital. The investments may be
1-62 made only for hedging purposes.
1-63 (e) This section expires <September 1, 1993 or> if the total
1-64 cumulative losses exceed $5,000,000 <$2,500,000, whichever comes
1-65 first>.
1-66 SECTION 2. The importance of this legislation and the
1-67 crowded condition of the calendars in both houses create an
1-68 emergency and an imperative public necessity that the
2-1 constitutional rule requiring bills to be read on three several
2-2 days in each house be suspended, and this rule is hereby suspended,
2-3 and that this Act take effect and be in force from and after its
2-4 passage, and it is so enacted.
2-5 * * * * *
2-6 Austin,
2-7 Texas
2-8 March 24, 1993
2-9 Hon. Bob Bullock
2-10 President of the Senate
2-11 Sir:
2-12 We, your Committee on Finance to which was referred S.B. No. 736,
2-13 have had the same under consideration, and I am instructed to
2-14 report it back to the Senate with the recommendation that it do
2-15 pass and be printed.
2-16 Montford,
2-17 Chairman
2-18 * * * * *
2-19 WITNESSES
2-20 No witnesses appeared on S.B. No. 736.