Okla. Admin. Code § 735:10-1-7

Current through Vol. 42, No. 4, November 1, 2024

Section 735:10-1-7 - Collateral security through safekeeping banks other than the Federal Reserve Bank

These procedures detail transactions when using a safekeeping bank other than the Federal Reserve Bank. All other transactions shall use the procedures found at 735:10-1-6. Permissible transactions under the rules are pledging, releasing and substituting collateral securities. When substituting collateral instruments for collateral securities, follow the procedures outlined in 735:10-1-15.

(1) When pledging collateral securities:

(A) The pledgor bank shall:

(i) Complete Pledge Form (OST Form 95-007) in Appendix C of this Chapter.

(ii) Forward Pledge Form to safekeeping bank.

(B) The Safekeeping Bank shall:

(i) Generate custody receipt showing pledge to the State Treasurer.

(ii) Forward to OST the Pledge Form and custody receipt.

(C) OST shall:

(i) Review documents, and if approved, execute Pledge Form and attach custody receipt.

(ii) Retain form and custody receipt. Forward one (1) copy of form to pledgor bank and one (1) to safekeeping bank.

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

(A) The pledgor bank shall complete the release portion of the Pledge Form and forward to OST.

(B) OST shall:

(i) Review document, and if approved, execute release form.

(ii) Return one (1) copy of release form to pledgor bank and one (1) copy to safekeeping bank along with custody receipt.

(3) When substituting collateral securities for collateral securities, collateral may only be substituted when the current fair market value of the substitute collateral (plus any remaining pledged collateral) is equal to or greater than the maintenance percentage. This process will require a release and new pledge/substitution.

(A) The pledgor bank shall:

(i) Complete release part of Pledge Form for collateral to be released. Forward to OST.

(ii) Complete new Pledge Form (OST Form 95-007) in Appendix C of this Chapter for collateral being substituted, including the substitution part listing OST's original pledge number for the collateral being released. Forward to safekeeping bank.

(B) The Safekeeping Bank shall:

(i) Generate custody receipt showing pledge to OST.

(ii) Forward to OST new Pledge/Substitution Form and custody receipt.

(C) OST shall:

(i) Review documents, and if approved, execute release and Pledge/Substitution forms.

(ii) Retain new Pledge/Substitution Form. Forward one (1) copy to pledgor bank and one (1) copy to safekeeping bank. Return one (1) copy of release to pledgor bank along with custody receipt.

(4) For the substitution of collateral securities for collateral instruments, a substitution may only be made when the current fair market value of the substitute collateral (plus any remaining pledged collateral) is equal to or greater than the maintenance percentage. This process will require a release and new pledge/substitution.

(A) The pledgor bank shall:

(i) Complete the release part of the original Pledge Form for the collateral instrument to be released. Forward to OST.

(ii) Complete new Pledge Form (OST Form 95-007) in Appendix C of this Chapter for collateral securities being substituted, including the substitution part listing OST's original pledge number for the collateral instrument being released. Forward to safekeeping bank.

(B) The Safekeeping Bank shall:

(i) Generate custody receipt showing pledge to OST.

(ii) Forward to OST new original Pledge Form identifying the collateral securities to be substituted and the custody receipt.

(C) OST shall:

(i) Review documents, and if approved, execute release and Pledge/Substitution forms.

(ii) Retain new Pledge/Substitution Form. Forward one (1) copy to pledgor bank and one (1) copy to safekeeping bank.

(iii) Return one (1) copy of release to pledgor bank along with custody receipt.

(5) The State Treasurer, safekeeping bank and pledgor bank may send or receive pledge forms and notices by means of electronic transmission (fax, internet transmission) including E-mail or other technological means of communication acceptable to all parties. However, a hard copy of all such transactions shall be maintained by the State Treasurer, safekeeping bank and the pledgor bank consistent with their recordkeeping requirements set by statute or regulation.

Okla. Admin. Code § 735:10-1-7

Added at 13 Ok Reg 1583, eff 4-2-96 (emergency); Added at 13 Ok Reg 3341, eff 7-25-96; Amended at 15 Ok Reg 2479, eff 4-29-98 (emergency); Amended at 15 Ok Reg 2865, eff 6-25-98; Amended at 26 Ok Reg 1348, eff 5-26-09