North Dakota Administrative Code
Title 13 - Department of Financial Institutions
Article 13-03 - Credit Unions
Chapter 13-03-22 - Investment Activities
Section 13-03-22-06 - Investment policies

Universal Citation: ND Admin Code ยง 13-03-22-06

Current through Supplement No. 392, April, 2024

A credit union's board of directors must establish written investment policies consistent with North Dakota Century Code chapter 6-06, this part, and other applicable laws and regulations and must review this policy at least annually. These policies may be a part of a broader asset-liability management or similarly functioning policy. Written investment policies must address the following:

1. The purposes and objectives of the credit union's investment activities;

2. The characteristics of the investments the credit union may make, including the issuer, maturity, index, cap, floor, coupon rate, coupon formula, call provision, average life, and interest rate risk;

3. How the credit union will manage interest rate risk;

4. How the credit union will manage liquidity risk;

5. How the credit union will manage credit risk, including specifically listing institutions, issuers, and counterparties that may be used, or criteria for their selection, and limits on the amounts that may be invested with each;

6. How the credit union will manage concentration risk, which can result from dealing with a single issuer or related issuers, lack of geographic distribution, holding obligations with similar characteristics like maturities and indexes, holding bonds having the same trustee, and holding securitized loans having the same originator, packager, or guarantor;

7. Who has investment authority and the extent of that authority. Those with authority must be qualified by education or experience to assess the risk characteristics of investments and investment transactions. Only officials or employees of the credit union may be voting members of an investment-related committee;

8. The broker-dealers the credit union may use;

9. The safekeepers the credit union may use;

10. How the credit union will handle an investment that, after purchase, is outside of board policy or fails a requirement of this part; and

11. How the credit union will conduct investment trading activities, if applicable, including addressing:

a. Who has purchase and sale authority;

b. Limits on trading account size;

c. Allocation of cashflow to trading accounts;

d. Stop loss or sale provisions;

e. Dollar-size limitations of specific types, quantity, and maturity to be purchased;

f. Limits on the length of time an investment may be inventoried in a trading account; and

g. Internal controls, including segregation of duties.

General Authority: NDCC 6-01-04

Law Implemented: NDCC 6-06-06

Disclaimer: These regulations may not be the most recent version. North Dakota may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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