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<br />Currently, the City uses the services of Prudent Man <br />Analysis, Inc. (PMA) to rate the strength of the <br />commercial banks with which the City does business. <br />Inasmuch as PMA utilizes overall ratings of 1 through 5 <br />( 1 being strongest. 5 being weakest), the City' s <br />current policy is to seek depositories with a PMA rating <br />of 1 or 2. Banks with ratings of 3 shall be eligible to <br />serve as a depository, but must be periodically and <br />substantively reviewed. Banks rated in the 4 or 5 <br />category will not qualify to receive City monie$. The <br />Ci ty also subscribes to reports prepared by the <br />Sheshenoff Agency. <br /> <br />2. <br /> <br />Savings and Loan Associations: <br /> <br />Deposits of City monies in savings and loan association~ <br />shall be subject to the same rating criteria which are <br />applied to commercial banks. Their acceptability as <br />depositories will be judged on the third-party ratings of <br />such organizations as PMA or its counterparts. <br /> <br />3. <br /> <br />Securities Dealers: <br /> <br />There are currently 40 major investment banking firms- <br />which are listed by the Market Reports Division of the <br />Federal Reserve Bank of New York as the 40 "primary" <br />securities dealers (see Appendix F). These dealers are <br />unique within the United States government securities <br />industry in that they both "report" and are "regulated" <br />in an industry which is typically "non-reporting" and <br />"unregulated." <br /> <br />Current Department of Finance policy is to restrict <br />transactions relating to the purchase and sale of U. S . <br />Government securities to this list. of "primary" <br />securities dealers. Such policy, therefore, will <br />preclude the City from doing business with other brokers <br />and dealers whose financial strength and operational <br />capacities cannot be confidently determined, given the <br />absence of "reporting" and "regulation" requirements. <br /> <br />C. <br /> <br />Procedures for the Delivery and Possession of Securities: <br /> <br />It provides insufficient protection for the City to simply <br />limit its cash investments to those listed in part "A" of this <br />section. To ensure total protection, the Ci~y bas established <br />delivery and possession procedures which will be followed in <br />every case. Specifically: <br /> <br />1. <br /> <br />All ownership of securities shall be evidenced by an <br />acceptable safekeeping receipt issued by a third-party <br />financial institution which is acceptable to the City, or <br />by a safekeeping receipt from the Federal Reserve Bank. <br /> <br />All investment (or divestment) transactions will be <br />implemented on a "delivery vs. payment" (or "payment vs. <br /> <br />2. <br /> <br />5 <br />