Texas Education Code - Section 43.018. Participation In Fully Secured Securities Loan Programs
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§ 43.018. PARTICIPATION IN FULLY SECURED SECURITIES LOAN
PROGRAMS. (a) The State Board of Education may contract with a
commercial bank to serve both as a custodian of securities in which
the state permanent school funds are invested and to lend those
securities, under the conditions prescribed by Subsection (b), to
securities brokers and dealers on short-term loan.
(b) The State Board of Education may contract with a
commercial bank pursuant to this section only if:
(1) the bank is located in a city having a major stock
exchange;
(2) the bank is experienced in the operation of a fully
secured securities loan program;
(3) the bank has adequate capital in the prudent
judgment of the State Board of Education to assure the safety of the
securities entrusted to it as a custodian;
(4) the bank will require of any securities broker or
dealer to which it lends securities owned by the state permanent
school fund that the broker or dealer deliver to it cash collateral
for the loan of securities, and that the cash collateral will at all
times be not less than 100 percent of the market value of the
securities lent;
(5) the bank executes an indemnification agreement,
satisfactory in form and content to the State Board of Education,
fully indemnifying the permanent and available school funds against
loss resulting from the bank's service as custodian of securities
of the permanent school fund and its operation of a securities loan
program using securities of the permanent school fund;
(6) the bank will speedily collect and remit on the day
of collection by the fastest available means to the comptroller any
dividends and interest collectible by it on securities held by it as
custodian, together with identification as to the source of the
dividends or interest; and
(7) the bank is the bank agreeing to pay to the
available school fund the largest sum or highest percentage of the
income derived by the bank from use of the securities of the
permanent school fund in the operation of a securities loan
program.
Added by Acts 1995, 74th Leg., ch. 260, § 1, eff. May 30, 1995.
Amended by Acts 1997, 75th Leg., ch. 1423, § 5.06, eff. Sept. 1,
1997.
Section: 43.011 43.012 43.013 43.014 43.015 43.016 43.017 43.018 43.019 43.020 44.001 44.0011 44.002 44.003 44.004
Last modified: August 10, 2007
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