Page 67 - City of Bedford FY20 Approved Budget

selecting primary depositories, the credit worthiness of institutions shall be considered, and the
Director of Finance shall conduct a comprehensive review of prospective primary depositories’
credit characteristics and financial history.

2. Collateralized Deposits. All depository deposits shall be insured or collateralized in
compliance with applicable State law. BEDFORD reserves the right, in its sole discretion, to
accept or reject any form of insurance or collateralization pledged towards depository deposits.
Financial institutions serving as BEDFORD Depositories will be required to sign a depository
agreement with BEDFORD. The collateralized deposit portion of the agreement shall define
BEDFORD’s rights to the collateral in case of default, bankruptcy, or closing and shall establish
a perfected security interest in compliance with Federal and State regulations, including:

a. The agreement must be in writing;

b. The agreement has to be executed by the Depository and BEDFORD
contemporaneously with the acquisition of the asset;

c. The agreement must be approved by the Board of Directors or designated committee
of the Depository and a copy of the meeting minutes must be delivered to
BEDFORD; and

d. The agreement must be part of the Depository’s “official record” continuously since
its execution.

X. Investment Strategies

In order to minimize risk of loss due to interest rate fluctuations, investment maturities will not
exceed the anticipated cash flow requirements of the funds. Investment guidelines by fund-type are
as follows:

1. General, Enterprise, or Operating-type Funds

Suitability - Any investment eligible in the Investment Policy is suitable for General,
Enterprise, or Operating-type Funds.

Safety of Principal - All investments shall be of high quality with no perceived default
risk. Market price fluctuations will occur. However, managing the weighted average days
to maturity of each fund’s portfolio to less than 270 days and restricting the maximum
allowable maturity to the shorter of the anticipated cash flow requirement or three years
will minimize the price volatility of the portfolio.

Marketability - Securities with active and efficient secondary markets are necessary in
the event of an unanticipated cash flow requirement. Historical market “spreads” between
the bid and offer prices of a particular security-type of less than a quarter of a percentage
point will define an efficient secondary market.

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