SECTION 735:10-1-15. Procedures for providing collateral instruments as security

  These procedures shall be used when providing collateral instruments as security for state deposits. Permissible transactions under the rules are providing, releasing and substituting collateral instruments for collateral instruments or for collateral securities. When substituting collateral securities for collateral instruments, follow the procedures outlined in 735:10-1-6 and 10-1-7.

(1)   When providing collateral instruments:

(A)   The financial institution (or "pledgor bank") shall:

(i)   Complete original collateral instrument Pledge Form (OST Form 95-009) in Appendix E of this Chapter.

(ii)   Attach the Certificate of Insurance or Bank Deposit Guaranty Bond (for surety bonds) or Letter of Credit (for federal agency/instrumentality letters of credit) to the Pledge Form. For a Letter of Credit (LOC) from the Federal Home Loan Bank of Topeka (FHLB), the FHLB will deliver the LOC directly to the State Treasurer's Office, and a copy of the LOC should be attached to the Pledge Form.

(iii)   Forward Pledge Form and attached instruments to OST.

(B)   The federal agency/instrumentality or insurance company issuing the collateral instrument shall:

(i)   Forward a copy of a notification of coverage or insured limit to OST.

(ii)   Provide OST a quarterly listing of other institutions covered by collateral instruments by the issuer or provider of that instrument.

(C)   OST shall:

(i)   Review documents, and if approved, execute Pledge Form and attach the collateral instrument.

(ii)   Retain original Pledge Form and collateral instrument. Forward one (1) copy of the Pledge Form to the pledgor bank.

(2)   A pledgor bank will only be allowed to release collateral instruments when there are no State funds on deposit or when the amount of the remaining collateral instruments and the fair market value of the remaining collateral securities is equal to or greater than the required amounts established in 735:10-1-3. When releasing collateral instruments:

(A)   The pledgor bank shall complete the release portion of the original Pledge Form for the collateral instrument to be released and forward to OST.

(B)   OST shall:

(i)   Review document, and if approved, execute the release portion of the Pledge Form

(ii)   Return one (1) copy of the Pledge Form to the pledgor bank

(3)   A pledgor bank will only be allowed to substitute one collateral instrument for another collateral instrument or for collateral securities, when the amount of the substitute collateral instrument and the amount of the remaining collateral is equal to or greater than the required amounts established in 735:10-1-3. This process will require a release and new pledge/substitution. When substituting collateral instruments:

(A)   The pledgor bank shall:

(i)   Complete the release part of the original Pledge Form for the collateral instrument or collateral securities to be released. For collateral securities pledged through the Federal Reserve Bank to be released, complete their "Request to Release Pledged Securities" form.

(ii)   Complete an original collateral instrument Pledge Form, (OST Form 95-009) in Appendix E of this Chapter, for the collateral instrument being substituted, including the substitution portion listing OST's original pledge number for the collateral instrument or collateral securities being released.

(iii)   Attach the Certificate of Insurance or Bank Deposit Guaranty Bond (for surety bonds) or Letter of Credit (for federal agency/instrumentality letters of credit) to the Pledge Form. For a Letter of Credit (LOC) from the Federal Home Loan Bank of Topeka (FHLB), the FHLB will deliver the LOC directly to the State Treasurer's Office, and a copy of the LOC should be attached to the Pledge Form.

(iv)   Forward the original Pledge Form with the completed release(s), along with an original Pledge Form and the collateral instrument to be substituted, to OST.

(B)   The federal agency/instrumentality or insurance company issuing the collateral instrument to be substituted shall:

(i)   Forward a copy of a notification of coverage or insured limit to OST.

(ii)   Provide OST a quarterly listing of other institutions covered by collateral instruments by the issuer or provider of that instrument.

(C)   OST shall:

(i)   Review documents, and if approved, execute the release portion of the Pledge Form for the released collateral instrument or collateral securities and execute a new Pledge Form for the substituted collateral instrument.

(ii)   Return one (1) copy of the release form and one (1) copy of the new Pledge Form to the pledgor bank.

(iii)   For collateral securities held by a safekeeping bank other than the Federal Reserve Bank, return one (1) copy of the completed release form along with the custody receipt to the safekeeping bank.

(iv)   For collateral securities pledged through the Federal Reserve Bank, return the "Request to Release Pledged Securities" form to the Federal Reserve Bank.

(v)   Retain substituted collateral instrument and new Pledge Form.

[Source: Added at 15 Ok Reg 2479, eff 4-29-98 (emergency); Added at 15 Ok Reg 2865, eff 6-25-98; Amended at 16 Ok Reg 1262, eff 5-13-99]