HB 450: "An Act relating to investment pools for public entities; and providing for an effective date."

00HOUSE BILL NO. 450 01 "An Act relating to investment pools for public entities; and providing for an 02 effective date." 03 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 04 * Section 1. AS 37.23.020 is amended to read: 05  Sec. 37.23.020. AUTHORIZED INVESTMENTS. An investment pool may 06 invest only in securities that have a final maturity date within 13 months after the date 07 of purchase, except that floating rate securities with a final maturity date that is 08 longer than 13 months may be purchased if they are subject to at least an annual 09 reset. Investments may only include 10  (1) obligations of the United States and of an agency or instrumentality 11 of the United States; 12  (2) repurchase and reverse repurchase agreements secured by the 13 Treasury of the United States and obligations of an agency or instrumentality of the 14 United States;

01  (3) certificates of deposit, bankers acceptances, and other similar 02 obligations of a bank domiciled in the United States that has 03  (A) outstanding debt rated A or higher by at least one of the 04 nationally recognized rating services, including dollar-denominated 05 obligations issued by a United States branch of a foreign bank if the debt 06 of the parent is rated A or higher; and 07  (B) a combined capital and surplus aggregating at least 08 $500,000,000; 09  (4) commercial paper and other short-term taxable instruments that, at 10 the time of investment, maintain the highest rating by at least two nationally 11 recognized rating services; 12  (5) obligations of a corporation domiciled in the United States or 13 obligations of a municipality that are taxable under federal law [,] if the obligations 14 are rated A or higher by at least two nationally recognized rating services at the time 15 of investment; 16  (6) certificates of deposit that are issued by a state or federally 17 chartered financial institution that is a commercial or mutual bank, savings and loan 18 association, or credit union and if the institution's accounts are insured through the 19 appropriate federal insuring agency of the United States, regardless of whether the 20 institution meets the requirements of (3) of this section; 21  (7) money market funds in which the securities of the fund consist of 22 obligations listed in this section and otherwise meet the requirements of this chapter; 23  (8) other cash equivalent investments with a maturity date of one year 24 or less after date of the investment that are of similar quality to those listed in (1) - 25 (7) of this section, are rated A or higher by at least one of the nationally recognized 26 rating services, and are approved by the public entities participating in that investment 27 pool. 28 * Sec. 2. AS 37.23 is amended by adding a new section to read: 29  Sec. 37.23.035. SECURITIES LENDING. Securities held by an investment 30 pool may be loaned if the securities are fully collateralized and the collateral is, for 31 safekeeping, in the possession of a person who is independent of the borrowers. The

01 collateral must meet institutional and prudent investor standards. All pool proceeds 02 from securities lending must inure to the benefit of investment pool participants. 03 * Sec. 3. AS 37.23.040 is amended to read: 04  Sec. 37.23.040. PORTFOLIO RESTRICTIONS. The portfolio of an 05 investment pool under this chapter may not contain 06  (1) more than five percent of total investments in securities of one 07 issuer unless the securities are an obligation of or guaranteed by the United States; or 08  (2) [MORE THAN 30 PERCENT OF TOTAL INVESTMENTS IN 09 SECURITIES OF COMPANIES WHOSE PRINCIPAL BUSINESS IS IN THE SAME 10 INDUSTRY; OR 11  (3)] transactions in futures, options, derivative securities, or short sales. 12 * Sec. 4. This Act takes effect immediately under AS 01.10.070(c).