Current through Supplement No. 392, April, 2024
1. Regular way
settlement and delivery versus payment basis. A credit union may only contract
for the purchase or sale of a security as long as the delivery of the security
is by regular way settlement and the transaction is accomplished on a delivery
versus payment basis.
2. Federal
funds. A credit union may sell federal funds to an institution described in
subsection 4 of North Dakota Century Code section 6-06-06 and credit unions, as
long as the interest or other consideration received from the financial
institution is at the market rate for federal funds transactions.
3. Investment repurchase transaction. A
credit union may enter into an investment repurchase transaction so long as:
a. Any securities the credit union receives
are permissible investments for state-chartered credit unions; the credit
union, or its agent, either takes physical possession or control of the
repurchase securities or is recorded as owner of them through the federal
reserve book entry securities transfer system; the credit union, or its agent
receives a daily assessment of their market value, including accrued interest;
and the credit union maintains adequate margins that reflect a risk assessment
of the securities and the term of the transaction; and
b. The credit union has entered into signed
contracts with all approved counterparties.
4. Borrowing repurchase transaction. A credit
union may enter into a borrowing repurchase transaction so long as:
a. The transaction meets the requirements of
subsection 3;
b. Any cash the
credit union receives is subject to the borrowing limit specified in North
Dakota Century Code section 6-06-19 and any investments the credit union
purchases with that cash are permissible for credit unions; and
c. The investments referenced in subdivision
b mature no later than the maturity of the borrowing repurchase
transaction.
5.
Securities lending transaction. A credit union may enter into a securities
lending transaction so long as:
a. The credit
union receives written confirmation of the loan;
b. Any collateral the credit union receives
is a legal investment for credit unions; the credit union, or its agent,
obtains a first priority security interest in the collateral by taking physical
possession or control of the collateral, or is recorded as owner of the
collateral through the federal reserve book entry securities transfer system;
the credit union, or its agent, receives a daily assessment of the market value
of the collateral, including accrued interest; and the credit union maintains
adequate margin that reflects a risk assessment of the collateral and the term
of the loan;
c. Any cash the credit
union receives is subject to the borrowing limit specified in North Dakota
Century Code section 6-06-19 and any investments the credit union purchases
with that cash are permissible for credit unions and mature no later than the
maturity of the transaction; and
d. The credit union has executed a written
loan and security agreement with the borrower.
6.
a.
Trading securities. A credit union may trade securities which are permitted for
credit unions to own, including engaging in when-issued trading and pair-off
transactions, so long as the credit union can show that it has sufficient
resources, knowledge, systems, and procedures to handle the risks.
b. A credit union must record any security it
purchases or sells for trading purposes at fair value on the trade date. The
trade date is the date the credit union commits, orally or in writing, to
purchase or sell a security.
c. At
least monthly, the credit union must give its board of directors or
investment-related committee a written report listing all purchase and sale
transactions of trading securities and the resulting gain or loss on an
individual basis.
General Authority: NDCC 6-01-04
Law Implemented: NDCC
6-06-06
