1. What you should and should not accept as collateral

2.  Acceptable Collateral covered under RsMO 30.270, 110.010 and 110.020  State Treasurer also provides our list of acceptable collateral  Treasurer’s policy mirrors acceptable collateral outlined in state statutes  Separate policies for deposit collateral and repurchase agreement collateral (repo collateral much more restrictive)

3.  Currently have around 1,000 individual pieces of collateral  45% municipals  20% each agencies and agency mortgage pools  10% FHLB LOCs  5% Other (CMOs, Surety Bonds, etc.)  Treasurer’s Office decides whether or not to accept an individual piece of collateral  Structure, pricing availability, economic circumstances

4.  Likewise, up to public entity to decide what collateral to accept  Look for ease of pricing  If you don’t understand the structure – don’t take it (CMOs and MBSs)  Always remember – you might end up owning the collateral for a period of time so you need to be comfortable with what you bring in  Collateral should be held at third party custodial bank (Treasurer’s Office has 9)

5.  Collateral should be priced daily if possible – best practice is to be priced “regularly” (mark to market)  Haircut should be appropriate for volatility and risk of position  Treasuries --- 100 – 102%  Agencies and municipals --- 102%  MBS and CMOs --- 105%

6.  Daily procedures  Morning – run pricing  Check for under collateralized positions  Notify banks  Approve collateral  Notify custody banks for incoming positions  Book into system once received  Make acceptable collateral substitutions