Loading...
Item 4F Audio1 2 The suggested changes are designed simply to strengthen and clarify the policy and are not specifically required by Texas law 3 Section V. Eligible Investments (1.) Obligations of the United States or its Agencies Action: Include FHLB Letters of Credit (LOCs) in the U.S. government obligations section. Rationale: LOCs were specifically authorized by the PFIA several legislative sessions ago. Although an LOC is an obligation of the FHLB, the language clarified for bankers that LOCs were permitted as collateral. In recent months, a few banks have offered LOCs to secure deposits. Section V. Eligible Investments (5.) Repurchase Obligations Action: Delete the word “Selected” from the section on third-party safekeeping agents. Rationale: The City must simply approve the agent. Section V. Eligible Investments (6.) Certificates of Deposit Action: Add the following language: In addition, separate CDs issued by depositories wherever located, bundled together into a single investment with the full amount of principle and interest of each CD federally insured may be purchased through a selected depository institution with its main office or branch office in Texas. This depository shall act as the custodian for the various certificates on behalf of the City. Rationale: This language will allow for “pooled CD’s” in the Certificate of Deposit Account Registry Service (CDARS network), all of which are FDIC-insured. The last recommended change in Section V. Incorporates a minor amendment in the financial industry-the money market fund average maturity was lowered from 90 days to 60 days 4 Section VI. Safekeeping and Custody Action: Change the Public Securities Association (PSA) with the Security Industry and Financial Markets Association (SIFMA). Rationale: To reflect an industry name change. Section VII. Selection of Banks and Dealers Action: Add the following language: If the City uses an investment advisor, the advisor shall be responsible for performing due diligence and providing its detailed list of qualified broker/dealers to the city not less than annually. Rationale: Broker/dealers won’t sign certification forms if a public entity retains an investment advisor. The advisor is the legally responsible party to determine compliance with policy. 5 Section -Glossary Action: increase FDIC insurance from $100,000 to $250,000 incorporates an amendment in the financial industry Action: Delete reference to the Student Loan Market Association (Sallie Mae). Rationale: Sallie Mae is no longer an agency. Because there were Sallie Mae securities available in the secondary market, this security type was retained for years in many policy guidelines. Very few remain. It’s time to remove it from the City investment policy. 6 Now I would like to take a few moments to talk about the city’s investment strategy First objective is to assure that anticipated cash flows are matched with adequate investment liquidity. Second objective is to create a portfolio structure which will experience minimal volatility during economic cycles. This may be accomplished by purchasing high quality, short to medium term securities which will complement each other. A dollar weighted average maturity of 365 days or less will be calculated using the stated final maturity date of each security. 7 Securities purchased shall not have a stated maturity date which exceeds the debt service payment date. 8 These portfolios should include at least 10% in highly liquid securities to allow for flexibility and unanticipated project outlays. The stated final maturity dates of securities held should not exceed the estimated project completion date. 9 The Finance Director and Deputy Director-Administration are designated as Investment Officer(s) of the City and are responsible for investment decisions and activities. City staff involved in the investment process shall refrain from personal business activity that could conflict with proper execution of the investment program, which could impair the ability to make impartial investment decisions 10 The City of Southlake shall manage and invest its cash with four objectives, listed in order of priority: Safety, Liquidity, Yield, and Public Trust. The safety of the principal invested always remains the primary objective. All investments shall be designed and managed in a manner responsive to the public trust and consistent with State and Local law. 11 12 13