Page 185 - PowerPoint Presentation

Delivery versus Payment - All investment security transactions shall be conducted on a
delivery versus payment (DVP) basis to assure that the Town has control of its assets and/or
funds at all times.

IX. AUTHORIZED FINANCIAL DEALERS AND INSTITUTIONS
Securities broker/dealers may be primary or regional broker/dealers and will meet other
criteria as determined by the Investment Officer including state registration and completion
of a Town Broker/Dealer questionnaire (attached as Exhibit D). The following criteria must
be met by authorized firms.
• annual provision of an audited financial statement,
• proof of certification by the National Association of Securities Dealers (NASD)
• proof of current registration with the Texas State Securities Commission, and
• completion of the Town's broker/dealer questionnaire.

Every bank and broker/dealer with whom the Town transacts business will be provided a
copy of this Investment Policy to assure that they are familiar with the goals and objectives
of the investment program. The firm will be required to return a signed copy of the
Certification Form (attached as Exhibit C) certifying that the Policy has been received and
reviewed and only those securities approved by the Policy will be sold to the Town.

X. DIVERSIFICATION AND MATURITY LIMITATIONS
It is the policy of the Town to diversify its investment portfolio. Invested funds shall be
diversified to minimize risk or loss resulting from over-concentration of assets in a specific
maturity, specific issuer, or specific class of securities. Diversification strategies shall be
established and periodically reviewed.

XI. SAFEKEEPING AND COLLATERALIZATION
The laws of the State and prudent treasury management require that all purchased securities
be bought on a delivery versus payment (DVP) basis and be held in safekeeping by either an
approved, independent third party financial institution or the Town's designated depository.

Securities Owned by the Town - All safekeeping arrangements shall be approved by the
Investment Officer and an agreement of the terms executed in writing. The safekeeping bank
may not be within the same holding company as the bank from which the securities are
purchased. The custodian shall be required to issue original safekeeping receipts to the Town
listing each specific security, rate, description, maturity, CUSIP number, and other pertinent
information.

Collateral - Collateralization shall be required on all bank time and demand deposits for
principal and accrued interest amounts over the FDIC insurance coverage of $100,000 (by tax
identification number). In order to anticipate market changes and provide a level of
additional security for all funds, collateral with a market value equal to 102% of the total
deposits are required. The pledging bank will be made contractually liable for monitoring
and maintaining the collateral levels at all times. All collateral will be held by an independent
third-party bank outside the holding company of the bank, pledged to the Town.

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