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                                                                  S.B. No. 1318




AN ACT

relating to authorization of securities lending for governmental 
entities.  
	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:                        
	SECTION 1.  Subchapter A, Chapter 2256, Government Code, is 
amended by adding Section 2256.0115 to read as follows:
	Sec. 2256.0115.  AUTHORIZED INVESTMENTS:  SECURITIES 
LENDING PROGRAM.  (a)  A securities lending program is an 
authorized investment under this subchapter if it meets the 
conditions provided by this section.
	(b)  To qualify as an authorized investment under this 
subchapter:    
		(1)  the value of securities loaned under the program 
must be not less than 100 percent collateralized, including accrued 
income;
		(2)  a loan made under the program must allow for 
termination at any time;
		(3)  a loan made under the program must be secured by:                 
			(A)  pledged securities described by Section 
2256.009;              
			(B)  pledged irrevocable letters of credit issued 
by a bank that is:
				(i)  organized and existing under the laws 
of the United States or any other state; and
				(ii)  continuously rated by at least one 
nationally recognized investment rating firm at not less than A or 
its equivalent; or
			(C)  cash invested in accordance with Section:                        
				(i)  2256.009;                                                       
				(ii)  2256.013;                                                      
				(iii)  2256.014; or                                                  
				(iv)  2256.016;                                                      
		(4)  the terms of a loan made under the program must 
require that the securities being held as collateral be:
			(A)  pledged to the investing entity;                                 
			(B)  held in the investing entity's name; and                         
			(C)  deposited at the time the investment is made 
with the entity or with a third party selected by or approved by the 
investing entity;
		(5)  a loan made under the program must be placed 
through:           
			(A)  a primary government securities dealer, as 
defined by 5 C.F.R. Section 6801.102(f), as that regulation existed 
on September 1, 2003; or
			(B)  a financial institution doing business in 
this state; and      
		(6)  an agreement to lend securities that is executed 
under this section must have a term of one year or less.
	SECTION 2.  This Act takes effect September 1, 2003.                           

                                                                              




______________________________    ______________________________
President of the Senate             Speaker of the House
	I hereby certify that S.B. No. 1318 passed the Senate on 
May 6, 2003, by the following vote:    Yeas 31, Nays 0; and that the 
Senate concurred in House amendment on May 30, 2003, by a viva-voce 
vote.




______________________________ 
   Secretary of the Senate             
	I hereby certify that S.B. No. 1318 passed the House, with 
amendment, on May 28, 2003, by a non-record vote.




______________________________ 
   Chief Clerk of the House            



Approved:


______________________________ 
            Date



______________________________ 
          Governor