NAC356.130. Collateral pools: Pledges, releases and substitutions of securities.

     1. Except when the third-party depository is the Federal Reserve Bank:

     (a) If a depository that maintains a collateral pool wishes to pledge additional security to the third-party depository that the depository selected, the depository must notify the third-party depository in writing or any other method approved by the State Treasurer. By the end of the same business day on which the third-party depository receives the notification from the depository and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

     (b) If a depository that maintains a collateral pool wishes to release security held by the third-party depository that the depository selected, the depository must notify the State Treasurer in writing or any other method approved by the State Treasurer. If the State Treasurer approves the transaction, the State Treasurer will notify the third-party depository in writing. By the end of the same business day on which the third-party depository receives the notification from the State Treasurer and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

     (c) If a depository that maintains a collateral pool wishes to substitute security held by the third-party depository that the depository selected and the fair market value of the security proposed for substitution is:

          (1) Greater than or equal to the fair market value of the existing security, the depository must notify the third-party depository in writing or any other method approved by the State Treasurer. By the end of the same business day on which the third-party depository receives the notification from the depository and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

          (2) Less than the fair market value of the existing security, the depository must notify the State Treasurer in writing or any other method approved by the State Treasurer. If the State Treasurer approves the substitution of security, the State Treasurer will notify the third-party depository in writing. By the end of the same business day on which the third-party depository receives the notification from the State Treasurer and before the deadline established by the State Treasurer for processing such a transaction, the third-party depository shall process the transaction and provide the depository with acknowledgment that the transaction was completed.

     2. If a depository that selected the Federal Reserve Bank as its third-party depository wishes to pledge additional security to, or release or substitute security held at, the Federal Reserve Bank, the depository shall comply with the requirements set forth in the Operating Circulars of the Federal Reserve Banks governing book-entry securities.

     (Added to NAC by St. Treasurer by R028-04, eff. 6-30-2004)