Texas State Pooled Collateral Program. Texas State Pooled Collateral Program

Transcription

1 Texas State Pooled Collateral Program Tuesday, September 29, 2009 Austin, TX Page 1

2 Agenda Introductions Rulemaking Process Implementation Timeline Program Overview Discussion of Legislation and Comments Contacts Page 2

3 Our Team Treasury Operations Division Tom Smelker - Director Robert Coalter - Assistant Director Lynda Cantu - Manager, Cash & Securities Mgmt Wolf Bouldin - Senior Securities Officer Jonathan Gonzales - Securities Officer General Counsel Division Agency Affairs Serena Kuvet - Assistant General Counsel Page 3

4 Rulemaking Process Rulemaking is underway Rules will be published with a 30 day review period Comments will be invited Page 4

5 Implementation Timeline Sep. 29, 2009 Dec. 1, 2009 Feb.1, 2010 Apr. 1, 2010 Oct. 15, 2009 Jan. 1, 2010 Feb. Mar Participant Meeting Initial Rules Publication Final Rules Publication Program Begins Participant Comments Due 30 Day Comment Period Ends System and User Testing Page 5

6 Program Overview Legislation Senate Bill 638 Now Subchapter F of Section 2257 Participation Eligibility Voluntary Program Begins April 2010 Continued.. Page 6

7 Program Overview A Common Bank Deposit Collateral Pool Offered by banks Used by depositing entities Texas Comptroller will Manage Will monitor compliance Penalties for non-compliance Application Process Collateral security agreement Comptroller approval Continued.. Page 7

8 Program Overview Cost No cost to depositing entities Fees for financial institutions to cover costs Web-based System Configuration will begin shortly Automation and self help tools Reports will be available online User guide will be available Page 8

9 Process Flow Assessment Fe ees Submit Reports Application Transactions Page 9

10 What this means for you... Public Entities Accept collateral from a pool per financial institution Common platform, No cost to you Central compliance authority Financial Institutions Pledging collateral in a pool Annual fees assessment Central compliance authority Custodians Central Compliance authority Page 10

11 Discussion of Legislation and Comments Page 11

12 Discussion of Legislation and Comments Section Participating Institutions A participating financial institution that holds public funds Section Pooled Collateral Program An alternative to collateralization under Subchapter B Program responsibility - Comptroller Counties excluded Pooled collateral defined Participation is voluntary Continued.. Page 12

13 Discussion of Legislation and Comments Section Participation Binding collateral security agreement Needs Comptroller approval Parties will use prescribed forms Continued.. Page 13

14 Discussion of Legislation and Comments Section Collateral and Custodian Collateral Collateral percentage = 105% Reduced by FDIC coverage amount Excludes Sec (b) School districts Custodian Includes recent addition of Sec Qualifying custodian to be independent of financial institution. Exceptions: Banker s bank A federal reserve bank and home loan bank Continued.. Page 14

15 Discussion of Legislation and Comments Section Monitoring Collateral Participating institutions to file reports electronically Daily report Ledger balance by public entity Weekly report Total securities market value Monthly report - Collateral held by custodian(s) Annual report Financial statements Comptroller to provide electronically Acknowledgement Daily report Market value Continued.. Page 15

16 Discussion of Legislation and Comments Section Annual Assessment Annual fee to financial institutions Only to the extent of cost of the program Fee calculation is based on an established formula Public entity accounts Number of transactions Average weekly deposits Continued.. Page 16

17 Elements of Fee Assessment Assumptions 50 Banks 300 Agencies 15 Custodians 5,000 Transactions per year Costs Collateral securities pricing = $25,000 per year Staff costs = $35,000 per year Implementation cost over 5 years = $75,000 per year $135,000 per year Continued.. Page 17

18 Fees Structure to Recover Costs Account Volume Number of Number of Accounts Fee Banks Fee Rate Total Total # of Accounts < None $0 < $1,000 per year $10,000 > $2,500 per year $25, $35,000 $35,000 Transaction Fee Number of Transactions Fee Rate Total # of Transactions 5,000 $5 per transaction $25,000 $25,000 Page 18

19 Fees Structure to Recover Costs Number of Banks % Per Bank Fee Per Bank Total Average balance prorated over remanining $75, % 40% $750 $30, % 10% $1,500 $7, % 10% $3,750 $7, % 20% $7,500 $15, % 20% $15,000 $15, % $75,000 $75,000 Totals Fees to meet costs $135,000 Page 19

20 Discussion of Legislation and Comments Section Penalties for Reporting Violation Section Notice of Collateral Violation Section Penalty for Failure to pay Assessment Section Penalty Amount for Institutions Between $100 and $1,000 per day Penalty based on factors Average weekly deposits Number of violations Number of days of continued violation Average asset base Penalties not exclusive Page 20

21 Example Maximum Penalty = $1,000 per day Average Weekly Deposits < 5% $100 per day < 15% $200 per day > 15% $300 per day Average Asset Base Number of Violations 1 st Fee 2 nd Fee X 2 3 rd Fee X 3 Number of Days < $500 Million $100 per day $500 M to $2.5 B $200 per day > $2.5 Billion $300 per day After 7 days After 14 days Add $100 a day Add $200 a day Page 21

22 Discussion of Legislation and Comments Section Penalty Proceeding Contested Case Section Suit to Collect Penalty Section Enforcement Stayed Pending Review Section Use of Collected Penalties Page 22

23 Contacts Tom Smelker, Director, Treasury Operations Phone: Robert Coalter, Asst Director, Treasury Operations Phone: Lynda Cantu, Manager, Cash and Securities Management Phone: Wolf Bouldin, Sr. Securities Officer, Treasury Operations Phone: Jonathan Gonzales, Securities Officer, Treasury Operations Phone: Page 23