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DIVERSIFICATION <br />' It is the policy of the City to diversify its investment portfolio. Investments shall be diversified <br /> to accommodate the bud et and economic c cles and to eliminate the risk of loss resultin in <br /> g �'Y Y � g <br /> over concentration in a specific maturity, issuer or class of securities. <br /> COLLATERALIZATION <br /> 1. It is the policy of the City to require that certificates of deposits in excess of FDIC <br /> insurable limits be secured by some form of collateral to protect public deposits in a <br /> single financial institution if it were to default due to poor management or economic <br />, factors. <br /> 2. Eligible collateral instruments will be U.S. Government securities and obligations of <br /> federal agencies. <br /> 3. Safekeeping of Collateral - third party safekeeping is required for all collateral. <br /> a. To accomplish this, the securities can be held at the following locations: <br /> 1) A Federal Reserve Bank or its branch office <br /> 2) At another custodial facility - generally in the trust department through book <br /> entry <br /> 3) By the escrow agent or trust department of the pledging institution. <br /> b. Safekeeping will be documented by an approved written agreement. This may be <br /> in the form of a safekeeping agreement, trust agreement, escrow agreement or <br /> custody agreement. <br /> c. Substitution or exchange of securities held in safekeeping can be done without <br /> prior written notice to the City provided the market value of the replacement <br /> securities are equal or greater than the market value of the securities being <br /> replaced. The City will be notified in writing of all substitutions. <br /> SAFEKEEPING OF SECURITIES <br /> 1. Third party safekeeping is required for all securities. To accomplish this, the <br /> securities can be held at the following locations: <br /> a. A Federal Reserve Bank or its branch office. <br /> b. At another custodial facility, generally in the trust department through book entry. <br /> c. By the escrow agent or trust department of the pledging institution. <br /> d. A financial institution on the Illinois State Treasurer's approved list of safekeeping <br /> banks. <br /> 2. Safekeeping will be documented by an approved written agreement. This may be in <br /> the form of a safekeeping agreement, trust agreement, escrow agreement or custody <br /> agreement. <br /> 3 <br />