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SAFEKEEPING AND CUSTODY <br /> When investments purchased by the City are held in safekeeping by a broker/dealer, they <br /> must provide asset protection of $500,000 through the Securities Investor protection <br /> Corporation (SIPC) and at least another$2,000,000 supplemental insurance protection. <br /> DIVERSIFICATION <br /> It is the policy of the City to diversify its investment portfolios to eliminate the risk of <br /> loss resulting from the over concentration of assets in a specific maturity, a specific <br /> issuer, or a specific class of maturities. <br /> The portfolio, as much as possible, will contain both short-term and long-term <br /> investments. The City will attempt to match its investments with anticipated cash flow <br /> requirements. Liquidity is necessary to pay for recurring operations. Maturities should <br /> not be extended beyond the dates necessary to meet these projected liquidity needs and <br /> should be staggered in such a way that avoids over concentration in a specific maturity <br /> sector. Extended maturities may be utilized to take advantage of higher yields; however, <br /> no more than 20% of the total investment portfolio should extend beyond five (5) years <br /> and in no circumstance should any extend beyond ten (10) years. <br /> The portfolio will reflect diversity by class of maturity and issuer. The following limits <br /> are imposed for investments of a specific class: <br /> 1. Commercial Paper <br /> At any one time, no more than 20% of the total portfolio shall consist of <br /> commercial paper investments. Maximum holdings for any one issuer of <br /> commercial paper will be 5% of the total portfolio. <br /> 2. Certificates of Deposit <br /> At any one time, no more than 50% of the total portfolio shall consist of <br /> certificates of deposit. Maximum holdings for any one issuer of a certificate of <br /> deposit will be $100,000, or the amount insured by the Federal Deposit Insurance <br /> Corporation (FDIC), unless collateral is provided in accordance with this policy <br /> and Minnesota Statute Chapter 118. Maximum holdings for any one issuer of <br /> collateralized certificates of deposit will be 5% of the total portfolio. <br /> 3. Government Securities <br /> At any one time, no more than 60% of the total portfolio shall be invested in <br /> obligations of the federal government or its agencies. <br /> 4. Repurchase Agreements <br /> At any one time, no more than 5% of the total portfolio shall be invested in <br /> repurchase agreements. <br /> 11111 <br /> - 6- <br />