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Amend HB 860 by adding the following appropriately numbered
sections:
SECTION ___. Section 404.024, Government Code, is amended
by amending Subsections (b) and (l) and adding Subsections (m) and
(n) to read as follows:
(b) State funds not deposited in state depositories shall be
invested by the comptroller in:
(1) direct security repurchase agreements;
(2) reverse security repurchase agreements;
(3) direct obligations of or obligations the principal
and interest of which are guaranteed by the United States;
(4) direct obligations of or obligations guaranteed by
agencies or instrumentalities of the United States government;
(5) bankers' acceptances that:
(A) are eligible for purchase by the Federal
Reserve System;
(B) do not exceed 270 days to maturity; and
(C) are issued by a bank whose other comparable
short-term obligations are rated in [that has received] the highest
short-term [credit] rating category, within which there may be
subcategories or gradations indicating relative standing,
including such subcategories or gradations as "rating category" or
"rated," by a nationally recognized statistical rating
organization, as defined by Rule 2a-7 (17 C.F.R. Section 270.2a-7),
promulgated under the Investment Company Act of 1940 by the
Securities and Exchange Commission [investment rating firm];
(6) commercial paper that:
(A) does not exceed 270 days to maturity; and
(B) except as provided by Subsection (i), is
issued by an entity whose other comparable short-term obligations
are rated in [has received] the highest short-term [credit] rating
category by a nationally recognized statistical rating
organization [investment rating firm];
(7) contracts written by the treasury in which the
treasury grants the purchaser the right to purchase securities in
the treasury's marketable securities portfolio at a specified price
over a specified period and for which the treasury is paid a fee and
specifically prohibits naked-option or uncovered option trading;
(8) direct obligations of or obligations guaranteed by
the Inter-American Development Bank, the International Bank for
Reconstruction and Development (the World Bank), the African
Development Bank, the Asian Development Bank, and the International
Finance Corporation that have received the highest long-term
[credit] rating categories for debt obligations by a nationally
recognized statistical rating organization [investment rating
firm];
(9) bonds issued, assumed, or guaranteed by the State
of Israel;
(10) obligations of a state or an agency, county,
city, or other political subdivision of a state;
(11) mutual funds secured by obligations that are
described by Subdivisions (1) through (6) or by obligations
consistent with Rule 2a-7 (17 C.F.R. Section 270.2a-7), promulgated
by the Securities and Exchange Commission, including pooled funds:
(A) established by the Texas Treasury
Safekeeping Trust Company;
(B) operated like a mutual fund; and
(C) with portfolios consisting only of
dollar-denominated securities; [and]
(12) foreign currency for the sole purpose of
facilitating investment by state agencies that have the authority
to invest in foreign securities;
(13) asset-backed securities, as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7), that are rated at least A or its equivalent by a
nationally recognized statistical rating organization and that
have a weighted-average maturity of five years or less; and
(14) corporate debt obligations that are rated at
least A or its equivalent by a nationally recognized statistical
rating organization and mature in five years or less from the date
on which the obligations were "acquired," as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7).
(l) The comptroller may lend securities under procedures
established by the comptroller. The procedures must be consistent
with industry practice and must include a requirement to fully
secure the loan with cash, obligations described by Subsections
(b)(1)-(6), or a combination of cash and the described obligations.
Notwithstanding any law to the contrary, cash may be reinvested in
the items permitted under Subsection (b) or mutual funds, as
defined by the Securities and Exchange Commission in Rule 2a-7 (17
C.F.R. Section 270.2a-7) [In this subsection, "obligation" means an
item described by Subsections (b)(1)-(6)].
(m) In entering into a direct security repurchase agreement
or a reverse security repurchase agreement, the comptroller may
agree to accept cash on an overnight basis in lieu of the
securities, obligations, or participation certificates identified
in Section 404.001(3). Cash held by the state under this subsection
is not a deposit of state or public funds for purposes of any
statute, including this subchapter or Subchapter D, that requires a
deposit of state or public funds to be collateralized by eligible
securities.
(n) Notwithstanding any other law to the contrary, any
government investment pool created to function as a money market
mutual fund and managed by the comptroller or the Texas Treasury
Safekeeping Trust Company may invest the funds it receives in
investments that are "eligible securities," as defined by the
Securities and Exchange Commission in Rule 2a-7 (17 C.F.R. Section
270.2a-7), if it maintains a dollar-weighted average portfolio
maturity of 90 days or less, with the maturity of each portfolio
security calculated in accordance with Rule 2a-7 (17 C.F.R. Section
270.2a-7), and meets the diversification requirements of Rule 2a-7.