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COMPETITIVE BIDDING All investment transactions must be competitively transacted and <br />executed with broker/dealers or financial institutions that have been authorized by the City. The <br />City will obtain at least three competitive offers. Exception: New issues will not be required to <br />be competitively transacted as all broker/dealers would show the same price and yield. <br /> <br />VIII. COLLATERAL <br /> <br /> COLLATERALIZATION OF PUBLIC DEPOSITS Collateralization requirements are governed by the <br />Texas Government Code Chapter 2257 (Public Funds Collateral Act). All bank deposits, certificates <br />of deposit, and repurchase agreements shall be secured by pledged collateral. In order to <br />anticipate market changes and provide a level of security for all funds, the required minimum <br />collateral level will be a market value equal to no less than 102% of the deposits. Collateral levels <br />should be monitored and maintained by the financial institution. Repurchase agreements shall <br />be documented by specific agreement noting the collateral pledged in each agreement and should <br />be monitored daily. Collateral shall be reviewed monthly to assure the market value of the <br />securities pledged equals or exceeds the related bank balances. <br /> <br /> Collateral shall always be held by an independent third party with whom the <br />City of La Porte has a current custodial agreement. Evidence of the pledged collateral shall be <br />maintained by a written agreement. A safekeeping receipt must be supplied to the City of La <br />Porte for any transaction involving sales/purchases/maturities of securities and/or underlying <br />collateral, which the City of La Porte will retain. The right of collateral substitution is granted <br />provided the substitution has prior approval of the City and is followed by the delivery of an <br />original safekeeping receipt to the City, and replacement collateral is received prior to the release <br />of original collateral. <br /> <br /> COLLATERAL DEFINED The City shall accept only the following securities as collateral: <br /> <br />A. FDIC insurance coverage; <br />B. United States Treasuries and Agencies; <br />C. Obligations, including letters of credit, of the United States or its agencies and <br />instrumentalities. <br />D. Other securities as approved by the Fiscal Affairs Committee. <br /> <br /> SUBJECT TO AUDIT All collateral shall be subject to inspection and audit by the Director of Finance <br />or the City's independent auditors. <br /> <br />IX. SAFEKEEPING AND CUSTODY <br /> <br />SAFEKEEPING AGREEMENT <br />third party safekeeping. The third party custodian shall be required to issue safekeeping receipts <br />to the City listing each specific security, description, maturity, cusip number yield and/or coupon, <br />market value and other pertinent information. Each safekeeping receipt shall clearly indicate that <br />the instrument is held for the City of La Porte. All safekeeping arrangements shall be documented <br />by the Investment Officer. <br /> <br /> DELIVERY VERSUS PAYMENT All investment transactions, except local government investment <br />pool and mutual funds transactions, shall be executed on a delivery versus payment basis. That <br /> <br /> <br /> <br />