NAC: CHAPTER 356 - DEPOSITORIES OF PUBLIC MONEY AND SECURITIES

[Rev. 6/8/2018 3:28:10 PM--2017]

[NAC-356 Revised Date: 8-04]

CHAPTER 356 - DEPOSITORIES OF PUBLIC MONEY AND SECURITIES

356.010 Definitions.

356.020 “Acceptable securities” defined.

356.030 “Collateral pool” defined.

356.040 “Depository” defined.

356.050 “File transfer protocol” defined.

356.060 “Local government” defined.

356.070 “Public depositor” defined.

356.080 “Public money” defined.

356.090 “Third-party depository” defined.

356.100 Adoption by reference of Operating Circulars of Federal Reserve Banks.

356.110 Collateral pools: General requirements for participation by public depositor.

356.120 Collateral pools: Required agreements.

356.130 Collateral pools: Pledges, releases and substitutions of securities.

356.140 Collateral pools: Reports by depositories.

356.150 Collateral pools: Reports by third-party depositories.

356.160 Collateral pools: Duties of State Treasurer.

356.170 Collateral pools: Withdrawal of public depositor.

356.180 Collateral pools: Administrative fines.

NAC 356.010 Definitions. (NRS 356.390) As used in NAC 356.010 to 356.180, inclusive, unless the context otherwise requires, the words and terms defined in NAC 356.020 to 356.090, inclusive, have the meanings ascribed to them in those sections.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.020 “Acceptable securities” defined. (NRS 356.390) “Acceptable securities” has the meaning ascribed to it in subsection 2 of NRS 356.360.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.030 “Collateral pool” defined. (NRS 356.390) “Collateral pool” means the method of securing the repayment of the uninsured balances of the deposits of a participating public depositor at a depository through the total collateral pledged at a third-party depository for the uninsured balances of the deposits of all participating public depositors.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.040 “Depository” defined. (NRS 356.390) “Depository” has the meaning ascribed to it in NRS 356.310.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.050 “File transfer protocol” defined. (NRS 356.390) “File transfer protocol” means the communications protocol approved by the State Treasurer governing the transfer of files from the computer of a public depositor, depository or third-party depository to a computer at the Office of the State Treasurer over a network.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.060 “Local government” defined. (NRS 356.390) “Local government” has the meaning ascribed to it in NRS 356.320.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.070 “Public depositor” defined. (NRS 356.390) “Public depositor” means the State or a local government that deposits public money with a depository.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.080 “Public money” defined. (NRS 356.390) “Public money” has the meaning ascribed to it in NRS 356.330. The term includes, without limitation, savings deposits and demand deposits.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.090 “Third-party depository” defined. (NRS 356.390) “Third-party depository” has the meaning ascribed to it in NRS 356.340.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.100 Adoption by reference of Operating Circulars of Federal Reserve Banks. (NRS 356.350, 356.390)

1. The State Treasurer hereby adopts by reference the Operating Circulars of the Federal Reserve Banks. These publications are available, free of charge, from the Federal Reserve Bank of Boston, 600 Atlantic Avenue, Boston, Massachusetts 02210.

2. The State Treasurer will periodically review the Operating Circulars and determine within 30 days after the review whether any change made to a Circular is appropriate for application in this State. If the State Treasurer does not disapprove a change to a Circular within 30 days after the review, the change is deemed to be adopted by the State Treasurer.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.110 Collateral pools: General requirements for participation by public depositor. (NRS 356.350, 356.390)

1. To participate in a collateral pool at a depository, a public depositor must notify the depository on a form approved by the State Treasurer. The public depositor must provide a copy of the notice to the State Treasurer.

2. Within 5 business days after receipt of the notice described in subsection 1, the depository shall provide to the public depositor a list of the names and titles of all the accounts maintained by the public depositor at the depository. The public depositor shall review the list and, within 5 business days after receipt of the list, notify the depository of any inaccurate or incomplete information relating to the accounts of the public depositor at the depository.

3. Within 5 business days after submission of the form described in subsection 1 to the depository, the public depositor shall provide to the depository written authorization to:

(a) Request any third-party depository that holds collateral pledged on behalf of the public depositor to release all such collateral to the depository; and

(b) Repledge the securities for the benefit of the State Treasurer at the third-party depository selected by the depository.

4. For each new account opened at a depository by a public depositor that participates in a collateral pool at the depository, the public depositor shall:

(a) Inform the depository that the account is subject to the provisions of NRS 356.360.

(b) Report the account to the State Treasurer, on a form approved by the State Treasurer, on or before the deadline established by the State Treasurer for submission of such a form. The report must be submitted by file transfer protocol, electronic mail, facsimile, telephone or any other method approved by the State Treasurer.

5. A depository shall seek verification from a public depositor that participates in a collateral pool at the depository if the depository suspects that an account of the public depositor is not identified as a public account.

6. A public depositor that participates in a collateral pool at one or more depositories shall submit to the State Treasurer an annual report of all accounts that the public depositor maintained at each such depository during the immediately preceding year. The report must be submitted:

(a) On or before the deadline established by the State Treasurer for submission of the report;

(b) In a format approved by the State Treasurer; and

(c) By file transfer protocol, electronic mail, facsimile, telephone or any other method approved by the State Treasurer.

Ê The public depositor shall transmit to each depository referenced in the report a copy of the portion of the annual report that pertains to that depository.

7. A public depositor that participates in a collateral pool at a depository shall not secure any portion of the uninsured balances of its deposits pursuant to a direct pledge agreement with the depository.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.120 Collateral pools: Required agreements. (NRS 356.350, 356.360, 356.390)

1. A depository that receives notification from a public depositor that wishes to participate in a collateral pool at the depository pursuant to NAC 356.110 shall execute an agreement with the State Treasurer, in a format approved by the State Treasurer, to pledge and maintain collateral against the uninsured deposits of the public depositor. Such an agreement must:

(a) Require the depository to maintain as collateral at a third-party depository for the benefit of the State Treasurer acceptable securities having a fair market value that is at least 102 percent of the amount of the uninsured balances of the public money of the public depositor held at the depository.

(b) If the depository is not maintaining the minimum level of collateral at the third-party depository required by paragraph (a), require the depository to pledge additional collateral to meet the requirements of paragraph (a) within the deadline established by the State Treasurer.

(c) Prohibit the depository from holding, at any one time, public money in an amount exceeding the total equity of the depository, as reflected on the financial statement of the depository.

2. Except as otherwise provided in this subsection, if a depository that receives notification from a public depositor that wishes to participate in a collateral pool at the depository pursuant to NAC 356.110 has not yet established a collateral pool on the date of receipt of the notification, the depository shall execute an agreement with the State Treasurer and a third-party depository, in a format approved by the State Treasurer, to pledge and maintain collateral against the uninsured deposits of the public depositor at the third-party depository for the benefit of the State Treasurer. If the depository elects to use the Federal Reserve Bank as the third-party depository, the terms specified in the Operating Circulars of the Federal Reserve Banks governing book-entry securities apply.

3. An agreement entered into pursuant to subsection 2 with a third-party depository other than the Federal Reserve Bank must include a provision that requires the third-party depository to maintain only acceptable securities as pledged collateral from depositories.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.130 Collateral pools: Pledges, releases and substitutions of securities. (NRS 356.350, 356.360, 356.390)

1. Except when the third-party depository is the Federal Reserve Bank:

(a) If a depository that maintains a collateral pool wishes to pledge additional security to the third-party depository that the depository selected, the depository must notify the third-party depository in writing or any other method approved by the State Treasurer. By the end of the same business day on which the third-party depository receives the notification from the depository and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

(b) If a depository that maintains a collateral pool wishes to release security held by the third-party depository that the depository selected, the depository must notify the State Treasurer in writing or any other method approved by the State Treasurer. If the State Treasurer approves the transaction, the State Treasurer will notify the third-party depository in writing. By the end of the same business day on which the third-party depository receives the notification from the State Treasurer and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

(c) If a depository that maintains a collateral pool wishes to substitute security held by the third-party depository that the depository selected and the fair market value of the security proposed for substitution is:

(1) Greater than or equal to the fair market value of the existing security, the depository must notify the third-party depository in writing or any other method approved by the State Treasurer. By the end of the same business day on which the third-party depository receives the notification from the depository and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

(2) Less than the fair market value of the existing security, the depository must notify the State Treasurer in writing or any other method approved by the State Treasurer. If the State Treasurer approves the substitution of security, the State Treasurer will notify the third-party depository in writing. By the end of the same business day on which the third-party depository receives the notification from the State Treasurer and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

2. If a depository that selected the Federal Reserve Bank as its third-party depository wishes to pledge additional security to, or release or substitute security held at, the Federal Reserve Bank, the depository shall comply with the requirements set forth in the Operating Circulars of the Federal Reserve Banks governing book-entry securities.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.140 Collateral pools: Reports by depositories. (NRS 356.350, 356.360, 356.390)

1. Each depository that maintains a collateral pool shall submit to the State Treasurer:

(a) A daily report of the total balance of public money held at the depository in the accounts of public depositors that participate in the collateral pool as of the end of the business day to which the report pertains;

(b) A weekly summary report of the total fair market value of securities maintained by the depository at a third-party depository for the benefit of the State Treasurer as collateral for the uninsured balances of public money deposited with the depository by public depositors that participate in the collateral pool as of the end of the last business day of the week to which the report pertains;

(1) Listing all acceptable securities maintained by the depository at a third-party depository for the benefit of the State Treasurer as collateral for the uninsured balances of public money deposited with the depository by public depositors that participate in the collateral pool, including, without limitation, the fair market value of each of those securities, as of the end of the last business day of the month to which the report pertains; and

(2) Stating the number of accounts maintained at the depository by public depositors that participate in the collateral pool as of the end of the month to which the report pertains; and

(d) An annual report containing the financial statement of the depository for the immediately preceding year.

2. The reports required by subsection 1 must be submitted:

(a) On or before the deadlines established by the State Treasurer for submission of the reports;

(b) In a format approved by the State Treasurer; and

(c) By file transfer protocol, electronic mail, facsimile, telephone or any other method approved by the State Treasurer.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.150 Collateral pools: Reports by third-party depositories. (NRS 356.350, 356.390)

1. Each third-party depository other than the Federal Reserve Bank shall submit to the State Treasurer:

(a) A daily report of any pledge, release or substitution of security pursuant to NAC 356.130 that was completed on the day to which the report pertains. Such a report is not required if no such transactions were completed on that day.

(b) A monthly report of all securities held at the third-party depository on behalf of the depository for the benefit of the State Treasurer as of the end of the last business day of the month to which the report pertains.

2. The reports required by subsection 1 must be submitted:

(a) On or before the deadlines established by the State Treasurer for submission of the reports;

(b) In a format approved by the State Treasurer; and

(c) By file transfer protocol, electronic mail, facsimile, telephone or any other method approved by the State Treasurer.

3. If a depository had elected to use the Federal Reserve Bank as its third-party depository, the reporting requirements set forth in the Operating Circulars of the Federal Reserve Banks governing book-entry securities apply.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.160 Collateral pools: Duties of State Treasurer. (NRS 356.350, 356.360, 356.390) For the purposes of carrying out NRS 356.300 to 356.390, inclusive, the State Treasurer will:

1. Ensure that:

(a) An agreement to pledge and maintain collateral against the uninsured deposits of a public depositor that participates in a collateral pool has been executed pursuant to NAC 356.120 with each depository that maintains a collateral pool.

(b) An agreement to pledge and maintain collateral against the uninsured deposits of a public depositor that participates in a collateral pool has been executed with a third-party depository pursuant to NAC 356.120.

2. Notify a depository of its failure to maintain the minimum amount of acceptable securities as collateral that is required in an agreement executed pursuant to NAC 356.120 within the deadlines established by the State Treasurer for such notification.

3. Make available by electronic mail, by facsimile or on the Internet to authorized personnel of public depositors and depositories the reports submitted pursuant to NAC 356.140 and 356.150.

4. Establish and maintain a recordkeeping system for the purpose of reviewing and analyzing the daily, weekly and monthly reports submitted by public depositors, depositories and third-party depositories pursuant to NAC 356.140 and 356.150 to:

(a) Monitor the type and minimum amount of collateral pledged by a depository at a third-party depository as security for the uninsured balances of deposits of public depositors that participate in a collateral pool at the depository;

(b) Ensure that any account opened at a depository by a public depositor that participates in a collateral pool at the depository is reported for the purposes of NRS 356.360; and

5. Maintain a current list of participating public depositors, depositories and third-party depositories.

6. Establish and maintain an electronic database for the purposes of the receipt of reports submitted pursuant to NAC 356.140 and 356.150.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.170 Collateral pools: Withdrawal of public depositor. (NRS 356.350, 356.360, 356.390)

1. A public depositor may withdraw from a collateral pool at a depository by providing written notification of its intent to withdraw to the State Treasurer and the depository, including, without limitation, the effective date of withdrawal. The effective date of withdrawal must be more than 90 days after the State Treasurer receives written notification from the public depositor pursuant to this subsection.

2. Until the effective date of withdrawal of the public depositor, the depository of the withdrawing public depositor shall:

(a) Maintain the minimum amount of acceptable securities as collateral that is required in the agreement executed pursuant to NAC 356.120;

(b) Continue to provide the reports required pursuant to NAC 356.140; and

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)

NAC 356.180 Collateral pools: Administrative fines. (NRS 356.350, 356.360, 356.390) The State Treasurer will impose an administrative fine not to exceed:

1. One hundred dollars per day against a depository that willfully fails to submit a report required pursuant to NAC 356.140 by the deadline established by the State Treasurer for submission of the report.

2. Two hundred fifty dollars per day against a depository that willfully fails to maintain the minimum amount of acceptable securities as collateral that is required in an agreement executed pursuant to NAC 356.120.

(Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)