Chapter DFI-CU 68

DFI-CU 68.03(17) (17) “Standby commitment” means a commitment to either buy or sell a security, on or before a future date, at a predetermined price, or to sell a security in the future at a predetermined price. The seller of the commitment is the party receiving payment for assuming the risk associated with committing either to purchase a security in the future at a predetermined price, or to sell a security in the future at a predetermined price. The seller of the commitment is required to either accept delivery of a security (in the case of a commitment to buy) or make delivery of a security (in the case of a commitment to sell), in either case at the option of the buyer of the commitment.

DFI-CU 68.03(18) (18) “Trade date” means the date a credit union originally agrees, whether orally or in writing, to enter into the purchase or sale of a security.

DFI-CU 68.03(19) (19) “Yankee dollar deposit” means a deposit in a United States branch of a foreign bank licensed to do business in the state in which it is located, or a deposit in a state chartered, foreign controlled bank.

DFI-CU 68.03 History History: Cr. Register, May, 1985, No. 353, eff. 6-1-85; 2013 Wis. Act 277: am. (2) Register May 2014 No. 701, eff. 6-1-14.

DFI-CU 68.04 DFI-CU 68.04 Board responsibilities. The board of directors of each credit union shall maintain a current written policy governing the investment practices of the credit union.

DFI-CU 68.04 History History: Cr. Register, May, 1985, No. 353, eff. 6-1-85.

DFI-CU 68.05 DFI-CU 68.05 General authority. A credit union may contract for the purchase or sale of a security provided that:

DFI-CU 68.05(1) (1) The delivery of the security is to be made within 30 days of the trade date; and

DFI-CU 68.05(2) (2) The price of the security at the time of purchase is the market price.

DFI-CU 68.05 History History: Cr. Register, May, 1985, No. 353, eff. 6-1-85.

DFI-CU 68.06 DFI-CU 68.06 Authorized activities. In addition to the investments and securities authorized elsewhere in the Wisconsin statutes or the Wisconsin administrative code, Wisconsin-chartered credit unions may contract for the purchase and sale of the following securities and enter into the following types of transactions:

DFI-CU 68.06(1) (1) Cash forward agreements. A credit union may enter into a cash forward agreement to purchase or sell a security, provided that:

DFI-CU 68.06(1)(a) (a) The period from the trade date to the settlement date does not exceed 120 days;

DFI-CU 68.06(1)(b) (b) If the credit union is the purchaser, it has written cash flow projections evidencing its ability to purchase the security;

DFI-CU 68.06(1)(c) (c) If the credit union is the seller, it owns the security on the trade date; and

DFI-CU 68.06(1)(d) (d) The cash forward agreement is settled on a cash basis at the settlement date.

DFI-CU 68.06(2) (2) Authorized depository financial institutions. A credit union may invest in deposit accounts of any authorized depository financial institution, provided the aggregate investment per institution shall not exceed the greater of the deposit insurance limit under federal deposit insurance corporation or 1/2 the unimpaired balance of the credit union’s regular reserve unless the director of credit unions approves investment by the credit union exceeding this amount.

DFI-CU 68.06(3) (3) Repurchase transactions. A credit union may enter into an investment-type repurchase transaction or a financial institution-type repurchase transaction provided the purchase price of the security obtained in the transaction is at or below the market price. A repurchase transaction not qualifying as either an investment-type or financial institution-type repurchase transaction will be considered a loan-type repurchase transaction subject to applicable Wisconsin law.

DFI-CU 68.06(4) (4) Reverse repurchase transactions. A credit union may enter into a reverse repurchase transaction, provided that either any securities purchased with the funds obtained from the transaction or the securities collateralizing the transaction have a maturity date not later than the settlement date for the reverse repurchase transaction. A reverse repurchase transaction is a borrowing transaction subject to applicable Wisconsin law.

DFI-CU 68.06(5) (5) Federal funds. A credit union may sell federal funds to an authorized depository financial institution, provided that the interest or other consideration received from the financial institution is at the market rate for federal funds transactions and the transaction has a maturity of one or more business days or the credit union is able to require repayment at any time.

DFI-CU 68.06(6) (6) Yankee dollars. A credit union may invest in Yankee Dollar deposits in an authorized depository financial institution.

DFI-CU 68.06(7) (7) Eurodollars. A credit union may invest in Eurodollar deposits in a branch of an authorized depository financial institution.

DFI-CU 68.06(8) (8) Bankers’ acceptances. A credit union may invest in bankers’ acceptances issued by any bank which qualifies as an authorized depository financial institution.

DFI-CU 68.06 History History: Cr. Register, May, 1985, No. 353, eff. 6-1-85; 2013 Wis. Act 277: am. (2) Register May 2014 No. 701, eff. 6-1-14.

DFI-CU 68.07 DFI-CU 68.07 Prohibited activities.

DFI-CU 68.07(1) (1) The following types of investment transactions are prohibited for Wisconsin-chartered credit unions:

DFI-CU 68.07(1)(a) (a) Adjusted trading.

DFI-CU 68.07(1)(b) (b) Futures contracts.

DFI-CU 68.07(1)(c) (c) Short sales.

DFI-CU 68.07(1)(d) (d) Standby commitments.

DFI-CU 68.07(2) (2) A credit union board member, officer, committee member, and immediate family members of such individuals may not receive pecuniary consideration in connection with any investment transaction made by a credit union.

DFI-CU 68.07 History History: Cr. Register, May, 1985, No. 353, eff. 6-1-85.