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X. <br /> AUTHORIZED AND SUITABLE INVESTMENTS <br /> Authorized investments shall be limited to the instruments listed below as authorized and further <br /> described by the Act. <br /> 1. Obligations of the United States, its agencies and instrumentalities, not to exceed three years <br /> to the stated final maturity, excluding mortgage-backed securities; <br /> 2. Direct obligations of the State of Texas or its agencies and instrumentalities, not to exceed <br /> three years to the stated final maturity; <br /> 3. Other obligations, the principal of and interest of which are unconditionally guaranteed or <br /> insured by the full faith and credit of, the State of Texas or the United States or their respective <br /> agencies and instrumentalities, not to exceed three years to the stated final maturity; <br /> 4. Obligations of states, agencies, counties, cities, and other political subdivisions of any state <br /> rated as to investment quality by a nationally recognized investment rating firm not less than A <br /> or its equivalent, not to exceed three years to the stated final maturity; <br /> 5. Fully insured or collateralized certificates of deposit or share certificates issued by state and <br /> national banks or credit unions, not to exceed two year to the stated final maturity that are: <br /> a. Guaranteed or insured by the Federal Deposit Insurance Corporation or the National <br /> Credit Union Association, or other federal agency, or successors; or <br /> b. Collateralized at 102% in accordance with this Policy (Section XI). <br /> 6. Fully collateralized direct repurchase agreements having a defined termination date, <br /> collateralized in accordance with this Policy, safe-kept with an independent third party selected <br /> or approved by the City, with an executed master repurchase agreement, and placed through <br /> a primary government securities dealer, as defined by the Federal Reserve,or a bank doing <br /> business in Texas, not to exceed one year to stated maturity; <br /> 7. Investment Pools as defined and regulated by the PFIA. <br /> 8. Commercial paper rated not less than Al/P1 or its equivalent by two nationally recognized <br /> rating agencies and not to exceed 270 days to stated final maturity. <br /> 9. AAA-rated, SEC registered money market funds as described in Sec. 2256.014 of the PFIA. <br /> FDIC insured brokered certificate of deposit securities from banks in any US state, delivered versus <br /> payment to the City's safekeeping depository, not to exceed one year to maturity. Before purchase the <br /> Investment Officer or adviser must verify the FDIC status of the bank on <br /> www.2fdic.gov.idasp/main_bankfind/asp to assure that the bank is FDIC insured. <br /> XI. COLLATERALIZATION <br /> Pledged Collateral <br /> Collateralization is required on time and demand deposits. In order to anticipate market changes and <br /> provide a level of security for all funds, the collateralization margin level will be maintained at a minimum of <br /> 102% of deposits plus accrued. The counter party shall be made contractually liable for monitoring and <br /> maintaining the collateral and required margins at all times. Collateral shall be priced at least monthly. <br /> The custodian shall provide the required periodic reports directly to the City. <br /> Owned Collateral <br /> City of San Marcos Investment Policy Page 4 <br />