Texas Administrative Code › Title 28 - INSURANCE › Part 1 - TEXAS DEPARTMENT OF INSURANCE › Chapter 7 - CORPORATE AND FINANCIAL REGULATION › Subchapter A - EXAMINATION AND FINANCIAL ANALYSIS › Section 7.86 - Custodied Securities

Current through Reg. 49, No. 28; July 12, 2024
(a) Purpose. The
				  purpose of this section is to enable insurers and HMOs to demonstrate ownership
				  of securities held by a custodian in a manner consistent with the common
				  practices of securities exchanges and markets while protecting the public
				  interest. An insurer or HMO may demonstrate its ownership of other securities
				  in accordance with Insurance Code Article 21.39-B.
(b) Definitions. The following words and
				  terms, when used in this section, shall have the following meanings, unless the
				  context clearly indicates otherwise.
(1)
				  Clearing corporation--A corporation or system that provides for the book entry
				  settlement and custody of securities and is further defined in Insurance Code,
				  Article 21.39-B, §5(b) and Texas Business and Commerce Code, §
											8.102(a)(5).
(2) Custodian--A qualified bank, qualified
				  broker/dealer or a clearing corporation that accepts deposits of securities
				  from an insurer or HMO and safeguards, holds and reports on such securities
				  pursuant to a written custodial or trust agreement with an insurer or
				  HMO.
(3) Custodied Securities--An
				  insurer's or HMO's securities deposited with a custodian or redeposited with a
				  subcustodian.
(4) Insurer--A
				  domestic insurance company.
(5)
				  Qualified bank--A bank, federal home loan bank or trust company with trust
				  powers, organized under the laws of the United States or any state thereof,
				  which either is a member of the Federal Reserve System, a member of, or is
				  eligible to receive deposits which are insured by the Federal Deposit Insurance
				  Corporation, or maintains an account with a Federal Reserve Bank and is subject
				  to supervision and examination by the Board of Governors of the Federal Reserve
				  System, or is subject to supervision and examination by the Federal Housing
				  Finance Board, and is no less than "adequately capitalized" as defined by
				  standards promulgated by the appropriate federal bank regulatory
				  agency.
(6) Qualified
				  Broker/Dealer--A securities firm which has, as shown by its most recent audited
				  financial statement, a tangible net worth of at least $250 million, is
				  registered with and subject to the jurisdiction of the Securities and Exchange
				  Commission, and is a member of the Securities Investor Protection
				  Corporation.
(7)
				  Securities--Shares, participations, or other interests in property or an
				  enterprise as defined in the Texas Business and Commerce Code, §
											8.102(a).
				  The term includes certificated and uncertificated securities.
(8) Subcustodian--A qualified bank, qualified
				  broker dealer or a clearing corporation that accepts deposits of securities
				  from a custodian for safeguarding and holding.
(9) HMO--A health maintenance organization as
				  defined in the Insurance Code Article 20A.02(n).