No. 38180 (New Rule): Rule R628-21. Conditions and Procedures for the Use of Reciprocal Deposits

(New Rule)

DAR File No.: 38180
Filed: 12/13/2013 03:21:04 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is required by Subsections 51-7-17(4)(b) and 51-7-18(2)(b). This type of investment was added in the 2013 General Legislative Session and a rule was required to be written by H.B. 376.

Summary of the rule or change:

This rule provides the conditions under which a public entity may utilize reciprocal deposits. It provides for limits on how much of a public entity's funds may be invested in these types of deposits and requires public entities to report the amount of reciprocal deposits it has semi-annually to the Council. This rule requires a deposit account registry service that has Utah public funds, to maintain errors and omissions coverage and also report to the Department of Financial Institutions monthly the amount of Utah public funds in these types of deposits.

State statutory or constitutional authorization for this rule:

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

Anticipated cost or savings to:

the state budget:

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

local governments:

Local government entities are not affected as this is an additional investment available to them.

small businesses:

This rule only affects public entities and reciprocal depository providers.

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:

The reports required will not cause additional compliance costs for the reciprocal depository provider as these reports are already generated for other reporting purposes.

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

This rule will have no incremental costs or savings to government agencies or to private businesses, and no incremental compliance costs. The rule authorizes an additional and optional investment vehicle for public entities. It does not apply to private businesses or individuals.

Mark McRae, Chair

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 [e-mail]

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:

01/31/2014

This rule may become effective on:

02/07/2014

Authorized by:

Mark McRae, Chair, Money Management Council

RULE TEXT

R628. Money Management Council.

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. 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. 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)

 

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