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TITLE 34PUBLIC FINANCE
PART 1COMPTROLLER OF PUBLIC ACCOUNTS
CHAPTER 4TREASURY ADMINISTRATION
SUBCHAPTER APOOLED COLLATERAL PROGRAM
RULE §4.112Custodian Trustee Qualification and Participation

(a) A custodian trustee holds in trust the collateral pledged to secure deposits of public funds by the participating depository institution.

(b) A custodian trustee must qualify as a custodian under Government Code, §2257.104(c) or §2257.041(d) before acting as a custodian trustee in the pooled collateral program.

(c) A custodian trustee must be approved by a public entity before the custodian trustee may accept collateral to secure the deposit of its public funds.

(d) A custodian trustee or a permitted institution may not own, may not be owned by, and must be independent of the participating depository institution or institutions for which it holds the public entity's collateral in trust.

(e) The comptroller shall ensure that the custodian trustee is:

  (1) a state or national bank that:

    (A) is designated by the comptroller as a state depository;

    (B) has its main office or a branch office in this state; and

    (C) has a capital stock and permanent surplus of $5 million or more;

  (2) the Texas Treasury Safekeeping Trust Company;

  (3) a Federal Reserve Bank or a branch of a Federal Reserve Bank;

  (4) a banker's bank as defined by Texas Finance Code, §34.105;

  (5) a federal home loan bank; or

  (6) a financial institution authorized to exercise fiduciary powers and that is designated by the comptroller as a custodian pursuant to Government Code, §404.031(e).

(f) If the custodian trustee qualified is to act under the terms of Government Code, §2257.041(d)(1) or (5), the comptroller will enter into an agreement to protect the security interests of collateral pledged for the pooled collateral program. If the custodian trustee is qualified to act under Government Code, §2257.104(c)(1) - (3) or §2257.041(d)(2) - (4), it is not required to enter into such an agreement with the comptroller.

(g) A qualified custodian trustee will comply with the following requirements to participate in the pooled collateral program:

  (1) the custodian trustee shall comply with all procedures for pledge or withdrawal of collateral in the pooled collateral program;

  (2) the custodian trustee shall properly identify and hold the pledged collateral in trust for the benefit of the pooled collateral program. The custodian trustee may either keep all collateral pledged for the benefit of the program in one identifiable pooled collateral account or in an account in the name of the participating depository institution where the collateral is clearly pledged and identified for the program using a unique code reporting system;

  (3) the custodian trustee shall issue a trust receipt, advice of transaction, or other evidence of transaction to the comptroller indicating the pledge or withdrawal of collateral in a manner acceptable to the comptroller;

  (4) the custodian trustee shall not allow a withdrawal of the collateral without permission of the comptroller; and

  (5) the custodian trustee shall keep accurate and detailed records of all transactions related to the collateral.


Source Note: The provisions of this §4.112 adopted to be effective October 19, 2010, 35 TexReg 9345

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