Section 13-03-22-04 - Permissible investment activities1. 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; andb. 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; andc. 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.N.D. Admin Code 13-03-22-04
Effective January 1, 2007.Amended by Administrative Rules Supplement 2022-384, April 2022, effective 4/1/2022.General Authority: NDCC 6-01-04
Law Implemented: NDCC 6-06-06