DAR File No. 38180

Money Management Council, Administration

Rule R628-21

Conditions and Procedures for the Use of Reciprocal Deposits

Change in Proposed Rule

DAR File No.: 38180
Filed: 02/25/2014 02:14:02 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

Section R628-21-6, Limitation on use of Reciprocal Deposits, is being deleted by the Council after review of comments from Promontory and the Utah Bankers Association.

Summary of the rule or change:

Section R628-21-6 about limitations on the amount of these types of instruments that can be held by a public treasurer is being removed after comments received. Although it is a new type of investment, all funds placed in the investment are covered by federal insurance and are therefore protected from loss. (DAR NOTE: This change in proposed rule has been filed to make additional changes to a proposed new rule that was published in the January 1, 2014, issue of the Utah State Bulletin, on page 42. Underlining in the rule below indicates text that has been added since the publication of the proposed rule mentioned above; strike-out indicates text that has been deleted. You must view the change in proposed rule and the proposed new rule together to understand all of the changes that will be enforceable should the agency make this rule effective.)

State statutory or constitutional authorization for this rule:

• Subsection 51-7-18(2)(b)
• Subsection 51-7-17(4)(b)

Anticipated cost or savings to:

the state budget:

There will not be costs or savings to the state budget as the rule provides procedures to public entities investing in these types of deposits. The change will not affect costs.

local governments:

Local government entities are not affected as this is an additional investment available to them. The change will not affect costs.

small businesses:

This rule only affects public entities and reciprocal depository providers. The change will not affect costs.

persons other than small businesses, businesses, or local governmental entities:

Reciprocal depository providers will have no additional cost or savings as they already provide services to non-public entities in Utah.

Compliance costs for affected persons:

This change will not increase compliance costs, and the original rule has no compliance costs.

Comments by the department head on the fiscal impact the rule may have on businesses:

This change will have no costs or savings for government entities or for businesses.

Mark Watkins, Charman

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Money Management Council
Administration
Room 180 UTAH STATE CAPITOL COMPLEX
350 N STATE ST
SALT LAKE CITY, UT 84114

Direct questions regarding this rule to:

• Ann Pedroza at the above address, by phone at 801-538-1883, by FAX at 801-538-1465, or by Internet E-mail at [email protected]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

This rule may become effective on:

04/14/2014

Authorized by:

Mark Watkins, Chair, Money Management Council

R628. Money Management Council, Administration.

R628-21. Conditions and Procedures for the Use of Reciprocal Deposits.

R628-21-1. Authority.

This rule is issued pursuant to Section 51-7-17(4)(b) and 51-7-18(2)(b).

 

R628-21-2. Scope.

This rule applies to all public treasurers who purchase reciprocal deposits and to all qualified depositories providing reciprocal deposits.

 

R628-21-3. Purpose.

The purpose of this rule is to establish requirements for the investing of public funds in reciprocal deposits.

 

R628-21-4. Definitions.

For purposes of this rule the following terms are defined in Section 51-7-3 of the Act and when used in this rule have the same meaning as in the Act:

(1) Council;

(2) Commissioner;

(3) Public funds;

(4) Public treasurer;

(5) Qualified depository, and;

(6) Reciprocal deposits.

 

R628-21-5. General Rule.

(1) A public treasurer may invest public funds in reciprocal deposits only through qualified depositories that use a deposit account registry service. The public funds placed with a qualified depository into reciprocal deposits does not apply towards the maximum public funds allotment for that qualified depository as described in R628-11.

(2) Reciprocal deposits may only be initiated by qualified depository institutions and then re-deposited through a deposit account registry service as follows:

(a) in one or more FDIC insured depository institutions in amounts up to the relevant FDIC-insured deposit limit for a depositor in each depository institution; and

(b) in exchange for reciprocal FDIC-insured deposits made through the deposit account registry service to the qualified depository.

 

[R628-21-6. Limitation on Use of Reciprocal Deposits.

The maximum amount of any public treasurer's portfolio that can be invested in reciprocal deposits shall be as follows:

(1) Portfolios of $10,000,000 or less may not invest more than 10% of the total portfolio in reciprocal deposits.

(2) Portfolios greater than $10,000,000 but less than $20,000,000 may not invest more than $1,000,000 in reciprocal deposits.

(3) Portfolios of $20,000,000 or more may not invest more than 5% of the total portfolio in reciprocal deposits.

 

]R628-21-[7]6. Insurance Requirements for a Deposit Account Registry Service.

A deposit account registry service shall provide the public entity with proof of errors and omissions coverage equal to five percent of Utah public funds under management but not less than $1,000,000 nor more than $10,000,000 per occurrence.

 

R628-21-[8]7. Reporting Requirements.

(1) A public entity shall file a written report with the Council of reciprocal deposits on or before July 31 and January 31 of each year for deposits held on June 30 and December 31 respectively.

(2) Within 10 days of the end of each month, each qualified depository institution holding reciprocal deposits on behalf of public treasurers shall file a report with the Commissioner of the total month-end amount of Utah public funds in reciprocal deposits initially deposited into the qualified depository institution and currently re-deposited in one or more FDIC insured depository institutions.

 

KEY: public funds, qualified depository, reciprocal deposits

Date of Enactment or Last Substantive Amendment: 2014

Authorizing, and Implemented or Interpreted Law: 51-7-17(4)(b); 51-7-18(2)(b)