45 Neb. Admin. Code, ch. 18, § 003 - INVESTMENT LIMITS

003.01 When an investment company's assets consist solely of, and are limited to, obligations that are eligible for unlimited investment by a bank, there is no limit on a bank's investment.

003.02 When an investment company's assets contain obligations which are subject to the bank's investment or lending limitations, investment by the bank must be limited to twenty-five percent of its paid-up capital, surplus, capital notes, and debentures or fifteen percent of its unimpaired capital and unimpaired surplus, whichever is greater.

003.03 When an investment company makes use of repurchase agreements, the bank's investment is limited to twenty-five percent of its paid-up capital, surplus, capital notes, and debentures or fifteen percent of its unimpaired capital and unimpaired surplus, whichever is greater, provided that all of the following conditions are met:

003.03A The repurchase agreements are fully secured by securities of the United States government or any authorized agency thereof.

003.03B Possession of the collateral is obtained by either the bank or a third-party custodian designated by the bank under a written custodial agreement which explicitly recognizes the bank's interest in the securities as superior to that of any other person, or, in the case of book-entry securities, by appropriate entry in an account maintained in the name of the bank by a Federal Reserve Bank;

003.03C The collateral is marked to market on a daily basis.

003.04 When an investment company makes use of repurchase agreements which do not contain the elements set forth in Subsection 003.03 of this Rule, and/or securities lending arrangements, the bank's investment is limited to ten percent of its paid-up capital, surplus, capital notes and debentures or ten percent of its unimpaired capital and unimpaired surplus, whichever is greater.

003.05 When an investment company makes use of futures and options, or has the ability to do so, the fund is not an eligible investment for banks.

003.06 A bank may invest in an investment company which makes use of forward contracts, provided that the investment company maintains, in a segregated account, cash or cash equivalents or other portfolio securities equal in value to commitments to purchase securities, so that no leverage is employed.

Notes

45 Neb. Admin. Code, ch. 18, § 003

Adopted effective 11/25/2023