Legal Research Home > Texas Lawyer > Insurance Code - Not Codified > Texas Insurance Code - Not Codified - Article 2.10-3A. Securities Lending; Repurchase, Reverse Repurchase, And Dollar Roll Transactions

Art. 2.10-3A. SECURITIES LENDING; REPURCHASE, REVERSE REPURCHASE, AND DOLLAR ROLL TRANSACTIONS. Article repealed effective April 1, 2007 Definitions Sec. 1. In this article: (1) "Dollar roll transaction" means two simultaneous transactions, with settlement dates not more than 96 days apart, in one of which an insurer sells to a business entity and in the other the insurer is obligated to purchase from the same business entity substantially similar securities of the following types: (A) mortgage-backed securities issued, assumed, or guaranteed by the Government National Mortgage Association, the Federal National Mortgage Association, or the Federal Home Loan Mortgage Corporation or their successor organizations; or (B) other mortgage-backed securities described under Section 106, Title I, Secondary Mortgage Market Enhancement Act of 1984 (15 U.S.C. Section 77r-1), as amended. (2) "Repurchase transaction" means a transaction in which an insurer purchases securities from a business entity that is obligated to repurchase the purchased securities or equivalent securities from the insurer at a specified price, either within a specified period or on demand. (3) "Reverse repurchase transaction" means a transaction in which an insurer sells securities to a business entity and is obligated to repurchase the sold securities or equivalent securities from the business entity at a specified price, either within a specified period or on demand. (4) "Securities lending transaction" means a transaction in which securities are loaned by an insurer to a business entity that is obligated to return the loaned securities or equivalent securities to the insurer, either within a specified period or on demand. Transactions Authorized Sec. 2. (a) An insurer may engage in securities lending, repurchase, reverse repurchase, and dollar roll transactions as provided by this article. (b) The insurer shall enter into a written agreement for each transaction, other than a dollar roll transaction, that requires each transaction to terminate not later than the first anniversary of the inception of the transaction. Transaction Requirements Sec. 3. (a) Cash received in a transaction under this article must be: (1) invested in accordance with this article and in a manner that recognizes the liquidity needs of the transaction; or (2) used by the insurer for the insurer's general corporate purposes. (b) While the transaction is outstanding, the insurer, or the insurer's agent or custodian, shall maintain, as to acceptable collateral received in a transaction under this section, either physically or through the book entry systems of the Federal Reserve, Depository Trust Company, Participants Trust Company, or other securities depositories approved by the commissioner: (1) possession of the acceptable collateral; (2) a perfected security interest in the acceptable collateral; or (3) in the case of a jurisdiction outside of the United States, title to, or rights of a secured creditor to, the acceptable collateral. (c) An insurer may not enter into a transaction under this article if, as a result of and after giving effect to the transaction, the aggregate amount of securities loaned, sold to, or purchased from: (1) any one business entity counterparty under this article would exceed five percent of the insurer's assets; or (2) all business entities under this article would exceed 40 percent of the insurer's assets. (d) In computing the amount sold to or purchased from a business entity counterparty under a repurchase or reverse repurchase transaction, effect may be given to netting provisions under a master written agreement. (e) The amount of collateral required for a securities lending, repurchase, or reverse repurchase transaction is the amount required under the Purposes and Procedures Manual of the Securities Valuation Office or a successor publication. (f) The commissioner may adopt reasonable rules and orders consistent with, and as necessary to implement, this article. Added by Acts 1999, 76th Leg., ch. 1040, Sec. 2, eff. Sept. 1, 1999.

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Last modified: August 10, 2007