Texas Administrative Code › Title 7 - BANKING AND SECURITIES › Part 6 - CREDIT UNION DEPARTMENT › Chapter 91 - CHARTERING, OPERATIONS, MERGERS, LIQUIDATIONS › Subchapter H - INVESTMENTS › Section 91.802 - Other Investments

Current through Reg. 49, No. 28; July 12, 2024
(a)
				  Definitions. Unless the context clearly indicates otherwise, these words and
				  terms, when used in this section, shall have the following meanings. Any
				  technical words, terms, or phrases that are not specifically defined in this
				  section shall be construed in a manner consistent with the Texas Code of
				  Construction Act
(Tex. Govt. Code §
											RSA
				  311.001).
(1) Asset-backed security--A bond, note, or
				  other obligation issued by a financial institution, trust, insurance company,
				  or other corporation secured by either a pool of loans, extensions of credit
				  which are unsecured or secured by personal property, or a pool of personal
				  property leases.
(2) Bailment for
				  hire contract--A contract whereby a third party, bank, or other financial
				  institution, for a fee, agrees to exercise ordinary care in protecting the
				  securities held in safekeeping for its customers; also known as a custodial
				  agreement.
(3) Bankers'
				  acceptance--A time draft that is drawn on and accepted by a bank, and that
				  represents an irrevocable obligation of the bank.
(4) Borrowing repurchase transaction--A
				  transaction whereby a credit union either:
(A) agrees to sell a security to a
				  counterparty and to repurchase the same or any identical security from that
				  counterparty at a future date and at a specified price; or
(B) borrows funds from a counterparty and
				  collateralizes the loan with securities owned by the credit union.
(5) Cash forward agreement--An
				  agreement to purchase or sell a security with delivery and acceptance being
				  mandatory and at a future date in excess of 30 days from the trade
				  date.
(6) Counterparty--An entity
				  with which a credit union conducts investment-related activities in such a
				  manner as to create a credit risk exposure for the credit union to the
				  entity.
(7) Eurodollar deposit--A
				  deposit denominated in U. S. dollars in a foreign branch of a United States
				  financial institution.
(8) Federal
				  funds transaction--A short-term or open-ended transfer of funds to a financial
				  institution.
(9) Financial
				  institution--A bank or savings association, the deposits of which are insured
				  by the Federal Deposit Insurance Corporation, a federal or state-chartered
				  credit union, or the National Credit Union Central Liquidity
				  Facility.
(10) Investment--Any
				  security, obligation, account, deposit, or other item authorized for investment
				  by the Act or this section. For the purposes of this section, the term does not
				  include an investment authorized by §
											RSA
				  124.351(a)(1) of the Texas
				  Finance Code .
(11) Investment
				  repurchase transaction--A transaction in which a credit union agrees to
				  purchase a security from a counterparty and to resell the same or any identical
				  security to that counterparty at a later date and at a specified
				  price.
(12) Mortgage related
				  security--A security which meets the definition of mortgage related security in
				  United States Code Annotated, Title 15, §78c(a)(41).
(13) Nationally recognized statistical rating
				  organization (NRSRO)--A rating organization such as Standard and Poor's,
				  Moody's, or Fitch which is recognized by the Securities and Exchange
				  Commission
(14) Ordinary care--The
				  degree of care, which an ordinarily prudent and competent person engaged in the
				  same line of business or endeavor should exercise under similar
				  circumstances.
(15) Security--An
				  investment that has a CUSIP number or that is represented by a share,
				  participation, or other interest in property or in an enterprise of the issuer
				  or an obligation of the issuer that:
(A)
				  either is represented by an instrument issued in bearer or registered form or,
				  if not represented by an instrument, is registered in books maintained to
				  record transfers by or on behalf of the issuer;
(B) is of a type commonly traded on
				  securities exchanges or markets or, when represented by an instrument, is
				  commonly recognized in any area in which it is issued or traded as a medium for
				  investment; and
(C) either is one
				  of a class or series or by its terms is divisible into a class or series of
				  shares, participations, interests, or obligations.
(16) Settlement date--The date originally
				  agreed to by a credit union and a vendor for settlement of the purchase or sale
				  of a security.
(17) Small
				  business-related securities--Is a security as defined in Section 3(a)(53) of
				  the Securities Exchange Act of 1934 (
				  RSA
				  78c(a)(53). This definition
				  does not include Small Business Administration securities permissible under
				  section 107(7) of the Federal Credit Union Act.
(18) Trade date--The date a credit union
				  originally agrees, whether orally or in writing, to enter into the purchase or
				  sale of a security.
(19) Yankee
				  dollar deposit--A deposit in a United States branch of a foreign bank, the
				  deposits of which are insured by the Federal Deposit Insurance Corporation,
				  that is licensed to do business in the state in which it is located, or a
				  deposit in a state chartered, foreign controlled bank.