For the purpose of this subchapter, the following definitions shall apply unless the context clearly indicates or requires a different meaning.
BANK. Any federally or state-chartered bank, savings and loan or credit union which meets the criteria spelled out in this subchapter.
BANKING SERVICE AGREEMENT. An agreement between the city and a bank detailing the services to be provided by the bank.
BROKER. A person who brings buyers and sellers together for a commission paid by the initiator of the transaction or by both sides. A BROKER does not favor either the buyer or seller. BROKERS are active in money markets where banks buy and sell money and in interdealer markets.
COLLATERAL. Securities, evidence of deposits or other properties that are pledged to secure repayment of a loan also refers to securities pledged by a bank to secure deposits of public money.
COMPREHENSIVE ANNUAL FINANCIAL REPORT (CAFR). The city’s official annual financial report prepared by external auditors. It includes five combined statements and basic financial statements each individual fund and account group in conformity with Generally Accepted Accounting Principles (GAAP). The CAFR includes supporting schedules necessary to show compliance with finance-related legal and contractual provisions, extensive introductory material and a detailed statistical section.
CERTIFICATE OF DEPOSIT (CD). A time deposit with a specific maturity evidenced by a certificate. Large denomination CDs are typically negotiable.
DEALER. A person who acts as a principal in all transactions, buying and selling for the dealer’s own account.
DELIVERY VERSUS PAYMENT. There are two forms of delivery of securities: delivery versus payment and delivery versus receipt (also called free). DELIVERY VERSUS PAYMENT is delivery of securities with an exchange of money for the securities. DELIVERY VERSUS RECEIPT is delivery of securities with an exchange of a signed receipt for the securities.
DEPOSITORY AGREEMENT. An agreement between the city and a bank to act as a depository for the monetary assets of the city.
DIVERSIFICATION. The division of investment funds among a variety of securities offering independent returns.
LIQUIDITY. The ability to convert an asset easily and rapidly into cash without substantial loss of value.
MARKET VALUE. The price at which a security is trading and at which it could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT. A written contract covering all future transactions regarding repurchase or reverse repurchase agreements which establishes each party’s rights in the transactions. A MASTER AGREEMENT will often specify the right of the buyer/lender to liquidate the underlying securities in case of the default by the seller/borrower.
MONEY MARKET. The venue in which short-term debt instruments are issued and traded.
PORTFOLIO. Collection of securities held by an investor.
PRIMARY DEALER. A government securities dealer which submits daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and is subject to informal oversight.
PRUDENT PERSON RULE. An investment standard where the Treasurer may invest only in a security if it is one that would be bought by a prudent person of discretion and intelligence who is seeking a reasonable income and preservation of capital.
QUALIFIED PUBLIC DEPOSITORY. A financial institution that does not claim exemption from the payment of any sales, compensating or ad valorem taxes under state law, which has segregated for the benefit of the commission eligible collateral having a value of not less than its maximum liability and has been approved by the Public Deposit Protection Commission to hold public deposits.
RATE OF RETURN. The quoted rate on the face of the security, based on its purchase price or its current market price. The RATE OF RETURN may be the amortized yield to maturity on a bond or the current income return.
REPURCHASE AGREEMENT (RP or REPO). An agreement to sell these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date.
RETIREMENT/PENSION FUNDS. Funds set aside for accepting and paying out pension benefits.
SAFEKEEPING. Services to customers rendered by banks for a fee under which securities and valuables of all types and description are held in the bank’s vaults for protection.
SECURITIES AND EXCHANGE COMMISSION. An agency created by Congress to protect investors in securities transactions by administering securities legislation.
TREASURY NOTE. An intermediate-term coupon bearing United States Treasury securities having an initial maturity of from one to ten years.
TRUST AND AGENCY FUNDS. Funds held for a group of agencies.
WIRE TRANSFER AGREEMENT. Agreement between the city and a depository that allows depositories to transfer funds between depositories via electronic means.
YIELD.
(1) The rate of the annual income return on an investment, expressed as a percentage:
(a) Income yield is obtained by dividing the current dollar income by the current market price for the security; and
(b) Net yield or yield to maturity is the current income yield minus any premium above par or plus any discount from par in the purchase price.
(2) The adjustment is spread from the purchase date to the date of the bond’s maturity.
(Ord. 521, passed 6-13-2006)