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78R17018 JJT-F
By: Van de Putte S.B. No. 1318
Substitute the following for S.B. No. 1318:
By: Martinez Fischer C.S.S.B. No. 1318
A BILL TO BE ENTITLED
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.