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IV. PURCHASING AND INVESTMENT <br /> The Policy requires establishment and approval of an authorized broker/dealer list with whom the <br /> City may transact business. The broker/dealer questionnaire helps provide the following <br /> evaluation: <br /> - Financial condition, strength and capability to fulfill commitments. <br /> - Overall reputation with other broker/dealers and investors. <br /> - Regulatory status of the broker/dealer. <br /> - Background and expertise of the individual representative. <br /> The City investment officer(s)and/or the contracted Investment Adviser/Manager will contact an <br /> appropriate number of broker/dealers for offers based on market evaluation,Investment Policy and <br /> collateral limitations, and cash flow information given <br /> The following will be determined with the broker/dealer: <br /> - Settlement basis-i.e. cash (same day), regular(next day), or when-issued (issue date) <br /> if a new agency issue. <br /> - Amount available for investment, <br /> - Type of security to be purchased excluded. <br /> - Targeted maturity, or maturity range. <br /> If choosing an investment pool as the preferred investment vehicle, the Council resolution and <br /> authorized individuals (PIN) resolutions must be in place prior to purchase and at any reasonable <br /> time thereafter. All pool transactions are initiated and controlled by City Investment Officer(s) <br /> All investment purchases will be executed using the competitive bidding process. A minimum of <br /> three competitive offers on the purchase of every security will be obtained or approval from an <br /> Investment Committee officer on a competitive offer due to market conditions and time <br /> constraints. All investment purchases will be executed in compliance with the Internal Revenue <br /> Service's Fair Market Rules. <br /> Before concluding the transaction, the Investment Adviser verifies the following: <br /> - The security meets all cash flow and Policy criteria. <br /> - The security structure including any imbedded options such as call provisions or <br /> coupon adjustments. <br /> - Yield calculations and settlement amounts. <br /> - Total purchase cost(including accrued interest). <br /> And, <br /> - Advises the successful provider that their offering has been selected for purchase. <br /> - Notifies any unsuccessful broker/dealers. Best price may be disclosed. <br /> City of San Marcos Investment Policy Page 15 <br />