Texas Attorney General Opinion: JM-1231 Page: 2 of 4
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Mr. Charles D. Travis - Page 2 (JM-1231)
securities under rules adopted by the board
of trustees and as required by this section.
(b) To be eligible to lend securities
under this section, a bank or brokerage firm
must:
(1) be experienced in the operation
of a fully secured securities loan pro-
gram;
(2) maintain adequate capital in the
prudent judgment of the retirement system
to assure the safety of the securities;
(3) execute an indemnification
agreement satisfactory in form and content
to the retirement system fully indem-
nifying the retirement system against loss
resulting from its operation of a secu-
rities loan program for the system's
securities; and
(4) require any securities broker or
dealer to whom it lends securities
belonging to the retirement system to
deliver to and maintain with the custodian
collateral in the form of cash or United
States government securities in an amount
equal to not less than 100 percent of the
market value, from time to time, of the
loaned securities. (Emphasis added.)
Securities lending is a form of investment. A 1986
opinion issued by the attorney general of the state of
Washington described securities lending agreements as
follows:
Under the terms of a securities lending
agreement, securities are presently paid out
in exchange for the right to receive re-
payment of the securities, plus interest,
at some future date. Securities lending
agreements, as income-producing loans, are
therefore an investment of funds and may be
constitutionally entered on behalf of the
permanent common school fund, public pension
or retirement funds, and industrial insurance
funds.p. 6549
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Texas. Attorney-General's Office. Texas Attorney General Opinion: JM-1231, text, October 8, 1990; (https://texashistory.unt.edu/ark:/67531/metapth273669/m1/2/: accessed May 3, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.