Texas Register, Volume 10, 63, Pages 3197-3236, August 23, 1985 Page: 3,206
3197-3236 p. ; 28 cm.View a full description of this periodical.
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shall be given to any foreign credit union
affected by such cancellation, at least 90
days prior to cancellation.
This agency hereby certifies that the pro-
posal has been reviewed by legal counsel
and found to be within the agency's au-
thority to adopt.
Issued In Austin, Texas, on August 16, 1985.TRD-857522
John R. Hale
Commissioner
Credit Union
DepartmentEarliest possible date of adoption:
September 23, 1985
For further Information, please call
(512) 837-9236.Investments
*7 TAC 91.802
The Credit Union Department proposes
new 91.802, concerning certain,invest-
ments by credit unions. The new section
specifies authorized investments which
presently are not specified by either stat-
utes or rules.
John F. Hale, credit union commissioner,
has determined that for the first five-year
period the section will be in effect there
will be no fiscal Implications for state or
local government or small businesses as
a result of enforcing or administering the
section.
Mr. Hale also has determined that for
each year of the first five years the sec-
tion is in effect there is no public benefit
anticipated as a result of enforcing the
section. There is no anticipated econo-
mic cost to individuals who are required
to comply with the section as proposed.
Comments on the proposal may be sub-
mitted to Harry L. Elliott, Staff Services
Officer, 914 East Anderson Lane, Austin,
Texas 78752.
The new section is proposed under Texas
Civil Statutes, Article 2481, 11.07, which
provide the Credit Union Commission
with the authority to promulgate general
rules and regulations pursuant to this
Act, and from time to time, to amend the
same.
91.802. Other Investments.
(a) General. In addition to the other
powers granted to credit unions by the Act,
8.01 thereof describes certain investments
which are authorized for credit unions op-
erating under the Act. Under 8.01(9), the
commission may authorize other invest-
ments by ules which must be responsive to
changes in economic conditions or compe-
titive practices, and the need for safety and
soundness of credit union investments. Al-
though this rule interprets some of the pro-
visions of 8.01 and authorizes certain in-vestments, it does not apply to or otherwise
limit the powers granted or other invest-
ments authorized by the Act or by other
rules.
(b) Definitions of terms.
(1) Bailment for hire contract--A
contract whereby a third party, bank, or
other financial institution, for a fee, agrees
to exercise ordinary care in protecting the
securities held in safekeeping for its custo-
mers.
(2) Bankers' acceptance-A time
draft that is drawn on and accepted by a
bank, and that represents an irrevocable
obligation of the bank.
(3) Cash forward agreement-An
agreement to purchase or sell a security with
delivery and acceptance being mandatory
and at a future date in excess of 30 days
from the trade date.
(4) Eurodollar deposit-A deposit
in a foreign branch of a United States finan-
cial institution.
(5) Federal funds transaction--A
short-term or open-ended transfer of funds
to a financial institution.
(6) Financial institution-A credit
union, bank, savings and loan association,
savings association, mutual savings bank,
or central liquidity facility, any one of
which is operating in accordance with state
or federal law.
(7) Repurchase transaction-A
transaction in which a credit union agrees
to purchase a security from a vendor and
to resell the same or any identical security
to that vendor at a later date. A repurci ise
transaction may be of three types.
(A) Investment-type repurchase
transaction-A purchase transaction where
the credit union purchasing the security
takes physical possession of the security, or
receives written confirmation of the pur-
chase and a custodial or safekeeping receipt
from a third party under a wi itten bailment
for hire contract, or is recorded as the own-
er of the security through the Federal Re-
serve book-entry system.
(B) Financial institution-type re-
purchase transaction-A repurchase with a
financial institution.
(C) Loan-type repurchase trans-
action-Any repurchase transaction that
does not qualify as an investment-type or
financial institution-type repurchase trans-
action.
(8) Reverse repurchase transac-
tion-A transaction whereby a credit union
agrees to sell a security to a purchaser and
to repurchase the same or any identical se-
curity from that purchaser at a future date
and at a specified price.
(9) Security-Any security, obliga-
tion, account, deposit, or other item autho-
rized for investment by the Act, 8.01, or
this section other than an investment au-
thorized by the Act, 8.01(1).
(10) Settlement date-The date
originally agreed to by a credit union anda vendor for settlement of the purchase or
sale of a security.
(1 I) Trade date-The date a credit
union originally agrees, whether orally or
in writing, to enter into the purchase or sale
of a security.
(12) Yankee dollar deposit-A de-
posit in a United States branch of a foreign
bank licensed to do business in the state in
which it is located, or a deposit in a state
chartered, foreign controlled bank.
(13) Trust-A company or associa-
tion in which ownership or membership is
confined or restricted to credit unions and
their members or organizations of credit
unions.
(c) Authorized activities.
(1) General authority. A credit
union may contract for the purchase or sale
of a security provided that delivery of the
security is to be made within 30 days from
the trade date.
(2) Cash forward agreements. A
credit union may enter into a cash forward
agreement to purchase or sell a security,
provided that:
(A) the period from the trade
date to the settlement date does not exceed
180 days;
(B) if the credit union is the pur-
chaser, it has written cash flow projections
evidencing its ability to purchase the securi-
ty;
(C) if the credit union is the sel-
ler, it owns the security on the trade date;
and
(D) the cash forward agreement
is settled on a cash basis at the settlement
date.
(3) Repurchase transactions. A
credit union may enter into an investment-
type repurchase transaction or a financial
institution-type repurchase transaction pro-
vided the purchase price of the security ob-
tained in the transaction is at or below the
market price. A repurchase transaction not
qualifying as either an investment-type or
financial institution-type repurchase trans-
action will be considered a loan-type repur-
chase transaction subject to the Act.
(4) Reverse repurchase transac-
tions. A credit union may enter into a re-
verse repurchase transaction. A reverse re-
purchase transaction is a borrowing trans-
action subject to the Act.
(5) Federal funds. A credit union
may enter into a federal funds transaction
with a financial institution, provided that
the interest or other consideration received
from the financial institution is at the mam-
ket rate for federal funds transactions and
that the transaction has a maturity of one
or more business days or the credit union
is able to require repayment at any time.
(6) Yankee dollars. A credit union
may invest in vankee dollar deposits.
(7). Eurodollars. A credit union
may invest in eurodollar deposits.
(8) Bankers' acceptances. A credit
union may invest in bankers' acceptances.10 TerRe, 3206 August 23, i~as Texas Register 4
Texas Register 40
10 TcxReg 3206 Augut 23, 1985
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Texas. Secretary of State. Texas Register, Volume 10, 63, Pages 3197-3236, August 23, 1985, periodical, August 23, 1985; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth243714/m1/12/: accessed April 27, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.