Policy No..: MDTA 7010 Effective: August 16, 2005
1. The term to maturity of repurchase agreements invested from accounts created by Trust Agreements shall be limited as follows: a. Bond Service Subaccount - 1 year. b. Reserve Subaccount - 1 year. c. Capital Account (bond proceeds) - the expected period of spend out, or five years, whichever is less. d. All Other Funds - 90 days. 2. The contract is fully secured by deliverable U.S. Treasury or Federal Agency obligations as described in 5i and 5ii above (without limit to maturity), having a market value at all times of a least one hundred two percent (102%) of the amount of the contract. 3. A master repurchase agreement or specific written, repurchase agreement governs the transaction. 4. The securities are held by an independent third-party custodian, acting solely as agent for the MDTA and free of any lien, provided such third party is not the seller under the repurchase agreement. 5. A perfected first security interest under the Uniform Commercial Code, or book entry procedures prescribed at 31 C.F.R. 306.1 et seq. in such securities as created for the benefit the MDTA. 6. For repurchase agreements with terms to maturity of greater than one (1) day, the MDTA will value the collateral securities weekly and require under collateralization to be corrected within one (1) business day. a. If a collateral deficiency is not corrected within this time fame, the collateral securities will be liquidated. 7. The counterparty must meet the following criteria: a. Be a primary government securities dealer that reports daily to the Federal Reserve Bank of New York, or a bank, savings and loan association or diversified securities broker- dealer having $5 billion in assets or $500 million in capital and subject to regulation of capital standards by any state or federal regulatory agency. b. Have a minimum long-term credit rating of a least single – A and a short-term rating of not less than Tier-1. c. Have been in operation for a least five (5) years. iv. Collateralized Certificates of Deposit - The MDTA may purchase Certificates of Deposit issued by, and time deposits in, any bank or savings and loan association organized under the laws of the State, any other state of the United States or of the United States, including the Trustee; provided that such bank or savings and loan association has combined capital, surplus and undivided profits of a least $100 million; and provided further that such Certificates of Deposit or time deposits are: 1. Insured by the Federal Deposit Insurance Corporation. 2. To the extend not so insured, collateralized by U.S. Treasury Obligations or Federal Agency Obligations, having a market value of a least one hundred two percent (102%) of the amount of contract.
a. Securities must be held by the Trustee or an independent third party acting solely as custodian on behalf of the
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