1 INVESTMENT POLICY OF THE CITY OF GLENDALE, CALIFORNIA September 2025
SECTION 1. PURPOSE
The purpose of this policy statement is to set forth the investment and operational policies for the management of the public funds of the City of Glendale, California. These policies have been adopted by, and can be changed only by, a majority vote of the City Council.
These policies are designed to ensure the prudent management of public funds, the availability of operating and capital funds when needed, and an investment return competitive with those of comparable funds and financial market indexes.
A copy of this statement will be provided to all investment dealers and investment managers doing business with the City of Glendale, and will be provided to other interested pa rties on request. Receipt of this policy, including confirmation that it has been revi ewed by persons dealing dir ectly with the City of Glendale’s account will be received prior to any organi zation providing investment services to the City of Glendale.
SECTION 2. STATUTORY AUTHORITY
City of Glendale Charter (Article XI, Section 2) provi des that “The City Treasurer shall receive and safely keep and pay out as directed in this Charter all moneys belonging to the city and all moneys received by or coming in to the hands of any officer, board, department or employee of the city and shall keep an exact account of receipts and disburse ment.” California Stat e Government Codes S ection 53607 and 53608 provide the authority for the legislative body of the local agency to invest the fund s of the local agency or to delegate the full responsibility to the treasurer of the local agency. As per Resolution No. 16,949, dated 14 September 1971, the elected City Tr easurer of the City of Glendale is authorized to invest and reinvest City funds and to sell or exchange securities so purchased.
SECTION 3. ORGANIZATION
The organization of the investment functions of the City of Glendale shall consist of the City Council, the City Treasurer and an Investment Policy Advisory Committee. The responsibilities of these groups are as follows:
1. The City Council
This group is the elected body responsible for the administration and investment of the investment assets of the City of Glendale. To assist them in discharging their responsibilities, the City Council shall supervise the actions of the elected City Treasurer as chair of the Investment Policy Advisory Committee.
2 SECTION 3. ORGANIZATION (Continued)
2. The Elected City Treasurer
The elected City Treasurer is the investment officer of the City of Glendale and is granted full authority and responsibility by the City Council in the purchase, sale, assignment, exchange and transfer of securities and for the safe custody of security holdings, subject to Council policies, rules, regulations and directives consistent with regulatory and statutory limitations. In the absence of the City Tr easurer, the Deputy City Treasurer shall perform the duties of investment as directed by the City Tr easurer. The City Charter provides for the replacement of the elected City Treasurer in case of death or permanent disability.
3. The Investment Policy Advisory Committee
The Investment Policy Advisory Committee is presently composed of seven (7) members: The elected City Treasurer as chairperson, the City Manager or his/her designee, the Director of Finance and Administrative Services, the Internal Auditor, a Department Head designated by the City Manager, a City Attorney representative, and a citizen representative. The co mmittee reviews the monthly reports presented to the City Council and confers with the City Treasurer if ther e are any concerns that need to be addressed. (See Committee Charter for further information concerning the duties of the committee.)
SECTION 4. INVESTMENT PHILOSOPHY
Except where specifically directed by the State Constitution, statutes, or regulations, the general investment policies of the City of Glendale will be guided by the “prudent investor” rule. Those with investment responsibility for public funds are fiduciaries and, as such, “shall exercise the judgment and care under the circumstances then prevailing that persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not in regard to speculation but in regard to the permanent disposition of their funds,” considering probable safety of their capital first as well as probable income. Public funds for the City of Glendale will be pooled for maximum investment objective. This policy is applicable, but not limited to all funds listed below:
General Fund Monies
Electric Funds Monies (not Bonds)
Water Fund Monies (not Bonds)
Capital Outlay Fund
Sewer Funds
Refuse Fund
Redevelopment Bonds, Bond reserve funds, deferred compensation and retirement funds are directed by the Director of Finance and Administrative Services via Trust Agents.
3 SECTION 5. INVESTMENT OBJECTIVES
The investment objective is as follows:
a. Objective - The primary investment objectives of this portfolio are preservation of principal and liquidity; income or yield is a SECONDARY objective.
b. Risk tolerance - Because most of the principal of the fund will be paid out over the course of the fiscal year, volatility of principal is not permitted. Financial risk is no t acceptable, and because of the short investment time horizon of the funds, exposure to in terest rate risk and purchasing power risk will be minimal.
c. Rate of return - The annual time-weighted rate of return of this portfolio should at least meet the annual total return on three-month Treasury bills.
d. ESG Responsibilities - In addition to and subordinate to the Safety, Liquidity, and Yield investment objectives, investments that support sound environmental, social and governance (ESG) objectives are also considered. Investment s in entities that support these objectives through practices that emphasize the following:
Environmental consideration such as Climat e Change, Carbon Emissions, Air and Water Pollution, Deforestation and Energy Efficiency.
Social Considerations such as Community Relations, Diversity, Labor Standards and specifically Human Rights.
Governance considerations such as Board Composition, Corruption and Lobbying that does not align with the city’s ESG policy.
There is no one specific and exhaustive list of ESG issues that should be considered, the specifics above are a baseline, and additional is sues should be considered from a moral and ethical perspective. Specific issues that will be considered include refraining from investments in entities that engage in direct production and/or drilling of fossil fuels, entities that lobby and deny the Holocaust and Genocide and entities that discriminate based on race, color, religion, sex (including gender identity, sexual orientation) national origin, age or disability.
SECTION 6. INVESTMENT POLICY GUIDELINES
Prohibited Investments include:
a. Loans with an agreement for the collateral to be re purchased by the borrower (repurchase agreements from the perspective of the public body).
b. Futures and options for the sole purpose of hedging interest rate risk.
c. Purchases on margin or short sales.
d. Derivative securities that are, in effect, a leveraged bet on future movements of interest rates or some price index. Collateralized Mortgage Obligations (CMO’s), because of their complexity and prepayment rate uncertainty.
e. Lending securities with an agreement to buy them back after a stated period of time (reverse repurchase agreements from the perspective of the public body).
4 SECTION 9. REPORTING REQUIREMENTS (Continued)
SECTION 7. EXECUTIONS
The responsibility for the execution of security transactions shall rest with the elected City Treasurer and/or his/her designated deputy/staff. The selection of the broker-dealer/securities trad er shall be on a best execution basis as determined by the City Treasurer.
Security orders shall be placed on the basis of accepted investment practices. A periodic review of the capital adequacy of institutions shall be undertaken by the elected City Treasurer.
Receipts for the confirmation of trades of authorized securities will include information on trade date, par value, maturity, interest rate, price, yield, settlement date, description of securities purchased, agency’s name, amount due, and third-party custodial inform ation. Confirmations will be received within three business days after the trade.
SECTION 8. PERSONAL CONDUCT
The City Council of the City of Glendale is acutely aware of the responsibilities that the staff has in administering the investment assets of the City of Gl endale. Therefore, the inte grity of the staff and all others involved in making investment decisions must be unquestioned.
Members of the City Council, the City Manager, De partment Heads, members of the investment staff, members of the Investment Policy Advisory Committee and other city committees or commissions may not have a direct or indirect interest in or gains or profits of any investment made by the City of Glendale and may not receive any pay or emolument for services ot her than as designated compensation and authorized expenses.
City of Glendale’s assets shall be governed in their personal investment activities by the codes of conduct established by the applicable state statutes, the National Association of Securities Dealers (NASD), and the Securities and Exchange Commission (SEC), and the code of Ethics and Standards of professional conduct of the Association for Investment Management and Research.
All persons responsible for investment decisions or who are involved in the management of the City of Glendale’s assets are prohibited from accepting invitations to functions if the cost is borne by the brokers or dealers, corporations, or the system local clearing banks. Exceptions to this rule are invitations that have been extended to other members of the investment community and are made for the express purpose of presenting topics pertinent to the investment of the City of Glendale’s assets.
SECTION 9. REPORTING REQUIREMENTS
A. Monthly
The City Treasurer shall submit a written monthly investment report to the City Council, the City Manager, the Investment Policy Advisory Committee, the Director of Finance and Administrative Services, the Internal Auditor, and the General Accounting Section.
Items required in that report include:
Type of Investment
Name of Issuer
Date of Purchase
Date of Maturity
Cost of security or amount of deposit
Par Value
Market Value
Book Value
5 SECTION 9. REPORTING REQUIREMENTS (Continued)
Effective Rate of Return
Accrued Interest
Average maturity
All investment transactions
Statement relating that the report adheres to the current investment policy Statement that there are sufficient funds to meet the next six month obligations
B. Quarterly
The City Treasurer shall submit a written quarterly investment report to the City Council. The detailed monthly investment report satisfies as the quarterly report. Distribution as indicated in Section 9A of this policy.
C. Annually
Annually the City Treasurer shall appear before the City Council to submit the annual investment report, which will include a review of the past year, and a general decision of strategies for the coming year.
SECTION 10. CASH AND INVESTMENT INSTRUMENTS
City active and inactive deposits may be kept in checking accounts and savings accounts at financial institutions as identified in California State Govern ment Code Section 53648 provided that they are adequately secured with proper collateral as prescribed by Government Code Sections 53656 and/or 53658.
Funds may be automatically swept from the above accounts into investment instruments provided those investment instruments are allowable investments as liste d in this section, and limited to the percentage of investment participation prescribed for each investment instrument.
Allowable investments for the portfolio of the City of Glendale are limited by California State Government Code Sections 53601 et seq.; 53635. They are further restricted by the City Treasurer’s investment strategy. Percentages of Investment Participation an d percentages of Maximum Participation apply at the time of purchase. Purchase transactions may not ex ceed $10,000,000, nor exceed five-year maturities.
Exceptions can only be approved by City Council. The investment instruments and percentage of participation permitted by this policy are:
U.S. Treasury Securities
United States Treasury notes, bonds, bills, or certificates of indebtedness, or those for which the faith and credit of the United States are pledged for the payment of principal and interest.
Maximum Maturity: 5 Years
Investment Participation: 100%
SECTION 10. CASH AND INVESTMENT INSTRUMENTS (continued) 6
Federal Agencies Securities
Obligations issued by banks for cooperatives, federal land banks, federal intermediate credit banks, federal home loan banks, the Federal Home Loan Bank Board, the Tennessee Valley Authority, or in obligations, participations, or other instruments of, or issued by, or fully guaranteed as to principal and interest by, the Federal National Mortgage Associati on; or in guaranteed portions of Small Business Administration notes; or in obligations, participations, or other instruments of, or issued by, a federal agency or United States government-sponsored enterprise.
Maximum Maturity: 5 Years
Investment Participation: 100%
State of California and California Local Agencies
Registered California warrants, treasury notes or bonds of this state, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled or operated by the state or by a department, board, agency, or authority of the state.
Bonds, notes, warrants or othe r evidences of indebtedness of an y local agency within California including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by the local agency, or by a department, board, agency, or authority of the local agency. Investments under this section must be ra ted “A” or better by a nationally recognized rating service.
Investment Participation: 15%
Maximum Exposure: 5% per Issuer
Obligations of Other States
Registered treasury notes or bonds of any of the other 49 states, including bonds payable solely out of the revenues from a revenue-producing property owned, controlled, or operated by a state or by a department, board, agency, or authority of any of the other 49 states.
Investment Participation 10%
Maximum Exposure 5% per Issuer
SECTION 10. CASH AND INVESTMENT INSTRUMENTS (continued) 7 Medium Term Notes
Medium term notes, defined as all corporate and depository institution debt securities with a maximum remaining maturity of five years or less, issued by corporations organized and operating within the United States or by depository institutions licensed by the United States or any state and operating within the United States. Notes eligible for investment under this subsection must be rated “A+” or better by a nationally recognized rating service.
If the credit rating of a security falls below the “ BBB” grade, it must be sold and removed from the City Portfolio unless the City Council approves the City Treasurer’s recommendation that the security should be retained. City Treasurer will monitor and report status of such security to City Council at each Quarterly Review.
Maximum Maturity: 5 Years
Investment Participation: 30%
Maximum Exposure: 5% per Issuer
Commercial Paper
Commercial Paper ranked A-1, P-1, F-1 by one of th e major rating agencies and issued by a domestic corporation having assets in excess of $500,000,000 and having an “A” or better rating on its long-term debentures as determined by a recognized national rating agency.
Maximum Maturity: 270 Days
Investment Participation: 25%
Credit Requirement A-1, P-1, F-1 (Per Moody’s/ S & P/ Fitch)
Bankers’ Acceptances-Domestic/Foreign
Bills of exchange or time drafts drawn on and accepted by a commercial bank, typically created from a letter of credit issued in a foreign trade transaction. Eligibility is limited to U.S. banking corporations.
Maximum Maturity: 180 Days
Investment Participation: 30%
Maximum Exposure: 10% per bank
Credit Requirement: A-1, P-1, F-1 (Per Moody’s / S&P/ Fitch) SECTION 10. CASH AND INVESTMENT INSTRUMENTS (continued) 8 Time Deposits (FDIC Insured or Collateralized Certificates of Deposits)
Time deposits, non-negotiable and collateralized in accordance with the California Government Code, may be purchased through banks or savings and loan associations. No more than 10% of the investment portfolio may be invested in this investment instrument.
Maximum Maturity: 1 Year
Investment Participation: 10%
Maximum Exposure: 5% per Issue
Negotiable Certificates of Deposit
Negotiable certificates of deposit i ssued by a nationally or state-char tered bank, a savings association or a federal association, a state or federal credit unio n, or by a state-licensed branch of a foreign bank.
Purchases of negotiable certificates of deposit may not exceed 30 percent of the agency’s money which may be invested pursuant to this section.
Maximum Maturity: 1 Year
Investment Participation: 30%
Maximum Exposure: 5% per Issuer
Credit Requirement: A-1, P-1, F-1 (Per Moody’s / S&P/ Fitch)
Money Market Mutual Funds
California Government Code Section 53601 (k) permits public agencies to invest 20% of their portfolio in mutual funds or money market. The City chooses to use money market mutual funds as described in California Government Code Section 53601 (k) (2), to the exclusion of other types of mutual funds. Money market funds are limited to a maximum dollar-weighted average maturity of 90 days; each investment must have a remaining maturity of thirteen months or less at time of purchase; and the fund must strive to maintain a constant net asset value of $1.00. These restrictions are designed to protect assets from a loss in value that can result from substantia l increases in interest rates.
The California Government Code Section 53601 (k) (2) permits public agencies to invest in “shares of beneficial interest issued by diversified management companies that are money market funds registered with the Securities and Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1, et seq.) as long as the comp any shall have met either of the following criteria:
(A) Attained the highest ranking or the highest letter and numerical rating provided by not less than two nationally recognized statistical rating organizations or (B) Retained an investment advisor registered or exempt from registration with the Securities and Exchange Commission with no less than five years’ experience investing in the securities and obligations authorized by subdivisions (a) to (j), inclusive, or subdivisions (m) or (n) and with assets under management in excess of five hundred million dollars ($500,000,000).
Investment Participation: 20 %
SECTION 10. CASH AND INVESTMENT INSTRUMENTS (continued) 9 LAIF (Local Agency Investment Fund), State of California Investment Pool
A pooled investment fund managed by the State, which operates like a money market fund for the exclusive benefit of governmental entities within California.
Investment Participation: Maximum (Set by the State)
Los Angeles County Treasury Pool
A pooled investment fund managed by the Los Angeles County Treasurer’s Office, which operates like a money market fund for the exclusive benefit of governmental entities within Los Angeles County.
Investment Participation: 10%
SECTION 11. INTERNAL CONTROLS
A system of internal controls will be maintained to assure compliance with Federal and State regulations, city council direction, and prudent cash management procedures.
1. Investment Policy Advisory Committee Review. Quarterly review of procedure and adherence to this Investment Policy will be performed.
2. Separation of Duties. Every care will be taken to ensure that investment duties will be conducted according to this policy. Reportin g of the investment transactions will be conducted by the Deputy City Treasurer within the investme nt tracing system. All transactions , interest received, etc. will be submitted to the Director of Finance and Administ rative Services. Additionally, the internal Audit Department will receive monthly reports for their review.
3. Annual Audit. There will be an annual audit conducted by an independent outside auditing firm to ensure compliance with all regulations and the investment policy of the city.
SECTION 12. AUTHORIZED FINANCIAL INSTITUTIONS AND DEALERS
The elected City Treasurer shall maintain a list of qualified institutions and dealers who provide investment services and are located in the State of California. Qualified institutions and dealers are defined as “primary” dealers or regional dealers that qualify under Securities and Exchange Commission Rule 15C3-1 (uniform net capital rule). No public deposit shall be made except in a qualified public depository as established by California law.
10 SECTION 12. AUTHORIZED FINANCIAL INSTITUTIONS AND DEALERS (continued)
All financial institutions and dealers seeking to become a provider of investment services with the City of Glendale will be considered. The financial institution( s) and/or dealer(s) will provide audited financial statements, proof of National Association of Security Dealers certification, trading resolution, proof of state of California registration, completed authorization to trade agreement and signed statement of having read and agreeing to comply with the City of Glendale’s investment policy BEFORE THEY WILL BE CONSIDERED. The City Treasurer will accept and review proposals from financial institutions and/or dealers on an ongoing basis.
SECTION 13. RISK TOLERANCE
The City of Glendale recognizes that investment risks can result from issuer defaults, market price changes or various technical complications leading to temporary illiquidity. Portfolio diversification is employed as a way to control risk. The City Treasurer is expected to display prudence in the selection of securities as a way to minimize default risk. No individual investment transaction shall be undertaken which jeopardizes the total capital position of the overall portfolio. Th e Treasurer shall periodically establish guidelines and strategies to control risks of default, market price changes and illiquidity.
The City Treasurer (as investment officer), acting in accordance with written policies and the “prudent investor” standard and exercising due diligence, shall be relieved of personal responsibility for an individual security’s credit risk or market price changes, provided that substantial deviations from expectations are reported by the Treasurer to the City Council within three days of discovery. Mu tually agreeable remedial action will be taken by the Treasurer and reported at the next Investment Policy Advisory Committee meeting.
It is explicitly recognized that in a diversified portfolio, occasional measured losses may occur, and must be considered within the context of overall investment return.
SECTION 14. SAFEKEEPING
Securities purchased from broker/dealers should be he ld in a third-party custodian/safekeeping account.
Said securities should be held in a manner that establishes the governmental entity’s right of ownership.
SECTION 15. STATEMENT OF INVESTMENT POLICY
The investment policy shall be reviewed annually by the Investment Policy Advisory Committee, and submitted to the City Council on an annual basis with or without changes.
SECTION 16. AMENDMENT TO SECTION 1
The City Manager of the City of Glendale shall periodically, on a no less than annual basis: i) review all investments of the City of Glendale, and investments made by deferred compensation or retirement plans that City of Glendale employees participate in, such as CalPERS, to assess whether such investments are in compliance with this Investment Policy, ii) where investments are found that are inconsistent with this Investment Policy, the City Manager shall a) share a copy of this Investment Policy with the Investment Manager responsible for managing such investments and encourage compliance with the objectives and guidelines described therein, and iii) share its findings with the Council of the City of Glendale.
11 SECTION 17. AMENDMENT TO SECTION 6
(f) i) sovereign debt issued by or relating to the government of the Republic of Azerbaijan, including public and private securities (ticker: AZERBJ), bonds, notes, debentures, loans, futures, options, derivatives, currency swaps, hedges or any other instruments, and any and all entities controlled directly or indirectly by the government of the Republic of Azerbaijan, including the International Bank of Azerbaijan OJSC (ticker:
IBAZAZ), State Oil Company of the Azerbaijan Republic, a/k/a SOCAR (ticker: SOIAZ) and Southern Gas Corridor CJSC (ticker: SGCAZE), or ii) investments in any other entity which, in any way, directly or indirectly, derives more than 10% of its gross revenues from the Republic of Azerbaijan (collectively, the “Prohibited Securities”), until such time as the government of the Republic of Azerbaijan, x) ceases engaging in genocide and human rights violations, y) complies with orders from the International Court of Justice, including the Order of 22 February 2023, and z) provides effective restitution to the victims of its hostilities in Nagorno-Karabakh.
APPENDIX A
12 GLOSSARY
AGENCIES: Federal agency securities
BANKERS’ ACCEPTANCES: A draft or Bill of Exchange accepted by a bank or trust company. The accepting institution guarantees payment of the bill, as well as the issuer.
BROKER: A broker brings buyers and sellers together for a commission paid by the initiator of the transaction or by both sides; he does not position. In the money market, brokers are active in markets in which banks buy and sell money and in interdealer markets.
COLLATERAL: Securities, evidence of deposit or other prop erty which a borrower pledges to secure repayment of a loan. Also refers to securities pledge s by a bank to secure deposits of public monies.
CERTIFICATE OF DEPOSIT (CD): A time deposit with a specific matu rity evidenced by a certificate.
Large denomination CD’s are typically negotiable.
COUPON: The annual rate of interest that a bond’s issuer promises to pay the bondholder on the bond’s face value. A certificate attach ed to a bond evidencing interest due on a payment date.
DEALER: A dealer, as opposed to a broker acts as a prin cipal in all transactions, buying and selling for his own account.
DELIVERY VERSUS PAYMENT: There are two methods of delivery of securities: delivery versus payment and delivery versus receipts (also called free). Delivery versus payment is delivery of securities with an exchange of money for the securities. Deliver y versus receipts is delivery of securities with an exchange of signed receipt for the securities.
DEBENTURES: A bond secured only by the general credit of the issuer.
DISCOUNT: The difference between the cost price of a security and its value at maturity when quoted at lower than face value. A security selling below original offering price shortly after sale also is considered to be at a discount.
DISCOUNT SECURITIES: Non-interest bearing money market instruments that are issued at discount and redeemed at maturity for full face value, e.g. U.S. Treasury bills.
DIVERSIFICATION: Dividing investment funds among a variety of securities offering independent returns.
FEDERAL CREDIT AGENCIES: Agencies of the Federal government set up to supply credit to various classes of institutions and individuals, e.g. S & L’s, small business firms, students, farmers, farm cooperatives, and exporters.
FEDERAL FUNDS RATE: The rate of interest at which Federal fu nds are traded. This rate is currently pegged by the Federal Reserve through open-market operations.
FEDERAL DEPOSIT INSURANCE COPRORATION (FDIC): A federal agency that insures bank deposits, currently up to $250,000. Per depositor.
APPENDIX A
GLOSSARY (continued)
13 FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA): FNMA like GNMA, was chartered under the Federal National Mortgage Association Act in 1938. FNMA is a federal corporation working under the auspices of the Department of Housing & Urban Development, H.U.D. It is the largest single provider of residential mortgage funds in the United St ates. Fannie Mae, as the corporation is called, is a private stockholder-owned corporation. The corporation’s purchases include a variety of adjustable mortgages and second loans in addition to fixed-rate mortgages. FNMA’s securities are also highly liquid and are widely accepted. FNMA assumes and guara ntees that all security holders will receive timely payment of principal and interest.
GOVERNMENT NATIONAL MORTGAGE ASSOCIATION:
(GNMA or Ginnie Mae): Securities
guaranteed by GNMA and issued by mortgage bankers, commercial banks, savings and loans associations and other institutions. Security holder is protected by full faith and credit of the U.S. Government. Ginnie Mae securities are backed by FHA, VA or FMHM mo rtgages. The term pass-throughs is often used to describe Ginnie Maes.
LIQUIDITY: A liquid asset is one that can be converted eas ily and rapidly into cash without substantial loss of value. In the money market, a security is said to be liquid if the spread between bid and asked prices is narrow and reasonable size can be done at those quotes.
LOCAL AGENCY INVESTMENT FUND (LAIF): Funds from local governmental units may be remitted to the California State Treasurer for deposit in this special fund for the purpose of investment.
MARKET VALUE: The price at which a security is trading and could presumably be purchased or sold.
MASTER REPURCHASE AGREEMENT: A written contract covering all future transactions between the parties to repurchase – reverse repurchase agr eements that establishes each party’s rights in the transactions. A master agreement will often specify, am ong other things, the right of the buyer-lender to liquidate the underlying securities in the event of default by the seller-borrower.
MATURITY: The date upon which the principal or stated value of an investment becomes due and payable.
MONEY MARKET: The market in which short-term debt instruments (bills, commercial paper, bankers’ acceptances, etc.) are issued and traded.
PORTFOLIO: Collection of securities held by an investor.
PRIMARY DEALER: A group of government securities dealers that submit daily reports of market activity and positions and monthly financial statements to the Federal Reserve Bank of New York and are subject to its informal oversight. Primary dealer s include Securities and Exchange Commission (SEC) registered securities broker-dealers, banks, and a few unregulated firms.
RATE OF RETURN: The yield obtainable on a security based on its purchase price of its current market price. This may be the amortized yield to maturity on a bond or the current income return.
APPENDIX A
GLOSSARY (continued)
14 REPURCHASE AGREEMENT (RP or REPO): A holder of securities sells these securities to an investor with an agreement to repurchase them at a fixed price on a fixed date. The security “buyer” in effect lends the “seller” money for the period of the agreement, and the te rms of the agreement are structured to compensate him for this. Dealers use RP extensively to finance their positions. Exception:
When the Federal Reserve Bank is said to be doing RP, it is lending money, that is, increasing bank reserves.
SAFEKEEPING: A service to customers rendered by banks fo r a fee whereby securities and valuables of all types and descriptions are held in the banks’ vaults for protection.
SECONDARY MARKET: A market made for the purchase and sale of outstanding issues following the initial distribution.
SEC RULE 15C3-1: See uniform net capital rule.
SECURITIES & EXCHANGE COMMISSION: Agency created by Congress to protect investors in securities transactions by administering securities legislation.
TREASURY BILLS: A non-interest bearing security issued by the U.S. Treasury to finance the national debt. Most bills are issued to mature in three month, six month, or one year.
TREASURY NOTES: Intermediate term coupon bearing U. S. Treasury securities having initial maturities of from one to ten years.
YIELD: The rate of 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. b) NET YIELD or YIELD TO MATURITY is the current income yield minus any premium above par or plus any discount from par in purchase price, with the adjustment spread over the period from the date of purchase to the date of maturity of the bond.
UNIFORM NET CAPITAL RULE: Securities and Exchange Commission requirement that member firms as well as nonmember broker-dealers in secur ities maintain a maximum ratios of indebtedness to liquid capital of 15 to 1: also called net capital rule and net capital ratio. Indebtedness covers al money owed to a firm, including margin loans and commitmen ts to purchase securities, one reason new public issues are spread among members of underwriting s yndicates. Liquid capital includes cash and assets easily converted into cash.
APPENDIX B
Guidelines
15 The City Treasurer, as the investment officer of the city, utilizes many tools to perform the duties vested in that position.
Some of those tools include:
The Treasurers’ Handbook issued by the California Municipal Treasurers’ Association (CMTA)
The California State Government Code Secs. 53600 et seq.
The Public Investor issued by the Government Finance Officers’ Association (GFOA)
TRACKER Portfolio Accounting & Reporting. This is a web-based portfolio accounting and reporting investment tool for institutional investors.
BLOOMBERG L.P. This tool provides financial software tools, such as analytics and equity trading platform, data services, and news to financial companies and organizations.
Annual conferences of the Calif ornia Municipal Treasurers’ Association (CMTA) and Government Investment Officers Association (GIO A). These conferences keep the treas urers current on legislation by way of monthly bulletins.
Investing Public Funds a publication by Girard Miller obtained th rough the Government Finance Officers’ Association (GFOA).
These tools are referred to on a frequent basis by both the City Treasurer and the Deputy City Treasurer.
They should be considered the “bibles” of investing by anyone involved in that duty.
There are many other reference books available in the Treasurer’s office for utilization in case of a short- term (or long-term) absence of the elected City Treasurer.