Okla. Admin. Code § 735:20-1-6

Current through Vol. 42, No. 6, December 2, 2024

Section 735:20-1-6 - Pledging and Releasing Collateral Securities

(a)Pledging through the Federal Reserve Bank.The following procedures shall be used only when conducting transactions using the Federal Reserve Bank as a safekeeping bank. All other transactions shall use the procedures found at 735:20-1-6(b). Permissible transactions under the rules are Pledging, Releasing and Substitution of collateral securities.

(1) When pledging collateral securities through the Federal Reserve Bank:

(A) The pledgor bank shall:

(i) Complete original Pledge Form (OST Form 2001-5) in Appendix M of this Chapter, in the lines dealing with the description of the Security:

(I) Security description

(II) Rate

(III) Issue date

(IV) CUSIP number

(V) Maturity date

(VI) Original face amount

(ii) Obtain the signature of the Duly Authorized Officers of the Pledgor Bank on the Collateral Securities Pledge Form, and fill in the date of signing.

(iii) Call Federal Reserve Bank and request security be pledged to generate an activity report.

(iv) The Federal Reserve Bank will forward an activity report to the pledging bank and the public entity treasurer showing the pledge to the public entity.

(v) Forward Pledge Form to the public entity treasurer.

(B) The public entity treasurer shall:

(i) Review the documents, and if approved, execute Pledge Form by signing and dating.

(ii) Retain original Pledge Form and activity report.

(iii) Forward one (1) copy of Pledge Form to pledgor bank.

(2)When releasing pledged collateral securities held at the Federal Reserve: The pledgor bank will only be allowed to release collateral securities when there are no longer any of the public entity's funds on deposit or the current market value of any remaining collateral securities is equal to or greater than the maintenance percentage.

(A) The pledgor bank shall:

(i) Complete the release portion on a copy of the original Pledge Form for the collateral security to be released.

(ii) Forward the form to the public entity treasurer.

(B) The public entity treasurer shall:

(i) Review documents, and if approved, execute release form by signing and dating.

(ii) Complete Federal Reserve Bank Form, "Request to Release Pledged Securities."

(iii) Return "Request to Release Pledged Securities Form" to Federal Reserve Bank.

(iv) Return one (1) copy of completed release to the pledgor bank.

(3)Substitution of collateral securities held at the Federal Reserve: A substitution of collateral securities may only be made when the current market value of the substitute collateral securities (plus any remaining pledged collateral) is equal to or greater than the maintenance percentage. This process will require a release and new pledge/substitution.

(A) The pledgor bank shall:

(i) Complete the release part on a copy of the original Pledge Form for the collateral security to be released.

(ii) Complete new Pledge Form (OST Form 2001-5) in Appendix M of this Chapter for the collateral security being substituted, including the substitution part listing the public entity's original pledge number for the collateral security being released.

(iii) Forward to the public entity treasurer the following:

(I) Release

(II) A new Pledge/Substitution Form

(iv) Call Federal Reserve Bank and request security be pledged to generate an activity report.

(B) The public entity treasurer shall:

(i) Review documents, and if approved, execute release and Pledge/Substitution forms by signing and dating.

(ii) Complete and fax to the Federal Reserve Bank the form, "Request to Release Pledged Securities."

(iii) The Federal Reserve will forward an activity report to the public entity treasurer and the pledging bank showing the pledge to the public entity.

(iv) Retain new Pledge/Substitution Form.

(v) Forward one (1) copy of the new Pledge/Substitution form and one (1) copy of the release form to the pledgor bank.

(b)Pledging through other Safekeeping Banks. Use the "Collateral Securities Pledge" form for the public entity which is OST Form 2001-5 (Appendix M).

(1)Pledging Collateral Securities through other Safekeeping Banks.

(A) The Pledgor Bank shall complete the following portions of the pledge form:

(i) The interest rate of the security,

(ii) Issue date,

(iii) CUSIP number,

(iv) Maturity date, and

(v) The original face amount of the security.

(vi) Obtain the signature of the Duly Authorized Officers of the Pledgor Bank who have been authorized to pledge and release collateral securities, and,

(vii) Fill in the Date of signing.

(viii) Fill in the name of the Safekeeping Bank.

(ix) Send original pledge form to Safekeeping Bank.

(B) The Safekeeping Bank generates a safekeeping receipt, and forwards itwith the pledge form to the public entity.

(C) The public entity treasurer completes the form by signing, dating, and notating the custody receipt number on the pledge form.

(D) The public entity treasurer provides a copy of the processed pledge form to the Pledgor Bank.

(2)Releasing collateral securities pledged through other Safekeeping Banks. The pledgor bank will only be allowed to release collateral securities when there are no longer any of the public entity's funds on deposit or the current market value of any remaining collateral securities is equal to or greater than the maintenance percentage.

(A) The pledging bank does the following:

(i) Fill out the Release information on the photocopy of the pledge form that was returned by the public entity treasurer, including signature of duly authorized bank officer and date of signing.

(ii) The Pledgor Bank will then forward the pledge release form to the public entity treasurer.

(B) The public entity treasurer shall:

(i) Review documents, and if approved, execute release form by signing and dating.

(ii) Complete the release portion on the safekeeping receipt.

(iii) Send release form with the release portion of the safekeeping receipt completed to the safekeeping bank.

(3)Substitution of collateral securities held at other Safekeeping Banks. A substitution of collateral securities may only be made when the current market value of the substitute collateral securities (plus any remaining pledged collateral) is equal to or greater than the maintenance percentage. This process will require a release and new pledge/substitution.

(A) The pledgor bank shall:

(i) Complete the release part on a copy of the original Pledge Form for the collateral security to be released.

(iii) Forward to the public entity treasurer the following:

(I) Release

(II) A new Pledge/Substitution Form

(B) The public entity treasurer shall:

(i) Review documents, and if approved, sign and date the release and Pledge/Substitution forms.

(ii) Send release form with the release portion of the safekeeping receipt completed and new Pledge/Substitution Form to the safekeeping bank.

(C) The Safekeeping Bank generates a safekeeping receipt for the substituted collateral security, and forwards it with the new Pledge/Substitution form to the public entity.

(D) The public entity treasurer completes the form by signing, dating and notating the custody receipt number on the Pledge/Substitution Form.

(E) The public entity treasurer provides a copy of the Pledge/Substitution Form to the pledgor bank.

(4) The public entity treasurer, safekeeping bank and pledgor bank may send or receive pledge forms by mail or transmit by facsimile. Notices may be made by means of electronic transmission (fax, internet transmission) including E-mail or other technological means of communication acceptable to all parties. However, a hard copy of all such notices shall be maintained by the public entity treasurer, safekeeping bank and the pledgor bank consistent with their recordkeeping requirements set by statute or regulation.

Okla. Admin. Code § 735:20-1-6

Added at 16 Ok Reg 1275, eff 5-13-99; Amended at 18 Ok Reg 2857, eff 7-1-01