Missouri Code of State Regulations › Title 12 - DEPARTMENT OF REVENUE › Division 10 - Director of Revenue › Chapter 43 - Investment of Nonstate Funds › Section 12 CSR 10-43.030 - Collateral Requirements for Nonstate Funds

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: The amendment increases the percentage
				  allowed for investments in repurchase agreements.
(1) Any depository investing nonstate funds
				as an investment agent of the director of revenue must guarantee there will be
				no deficiencies in daily transactions, or losses in any principal or interest
				due to the department on investment transactions.
(2) Any depository investing nonstate funds
				as an investment agent of the director of revenue must be subject to
				examination by-the Federal Deposit Insurance Corporation (FDIC) or other like
				federal government agency, the Securities and Exchange Commission (SEC), the
				Missouri Division of Finance or other like state agency, and independent
				auditors. The investment agent also shall have an internal audit program which
				meets the specifications of the Department of Revenue Investment
				Group.
(3) Any depository investing
				nonstate funds as an investment agent of the director of revenue must adhere to
				the following rules governing collateral:
(A)
				Before the investment agent places deposits with depository institutions, the
				investment agent must require that the institutions pledge collateral security.
				The following general procedures will be used:
1. Only securities that are issued or
				guaranteed by the United States government or its agencies or are at least A
				rated from one of the Nationally Recognized Statistical Ratings Organizations
				and are accepted as collateral by the Treasurer of the State of Missouri are
				acceptable to secure nonstate funds;
2. The entire value of the nonstate funds on
				deposit with the depository, including accrued interest, must be covered by the
				market value of securities pledged less applicable FDIC or other like
				insurance;
3. The investment agent
				may not disburse funds for investment until it is assured that adequate and
				proper collateral has been pledged. Telephone confirmation of securities
				pledged from a third-party custodian is acceptable pending receipt of the
				actual safekeeping document;
4.
				Securities may not be released until deposits, including accrued interest, are
				received from the depository institution;
5. The investment agent may allow
				substitution of acceptable collateral securities with equal or greater market
				value if the substitution occurs on a simultaneous basis. That is, the new
				collateral must be received before or at the same time the old collateral is
				released;
6. Excess collateral may
				be released if it is reasonable as determined by the investment agent. The
				investment agent will determine the market value of all collateral every two
				(2) weeks and compare that to the amount of deposits at each deposit
				institution. When the value of collateral falls below the amount of deposits,
				the investment agent must immediately demand additional collateral. If the
				depository institution fails to post the additional collateral within two (2)
				days of the day requested, the investment agent will request withdrawal of all
				deposits at that institution; and
7. The director of revenue, upon the
				recommendation of the Department of Revenue Investment Group, may require an
				institution pledging collateral to use a different third-party custodian which
				will be acceptable to the director;