N.Y. Retirement & Social Security Law § 177-d: Security loan agreements

§ 177-d. Security loan agreements. 1. A fund may enter into security

loan agreements with broker-dealers and with New York state or national

banks for the purpose of prudently supplementing the income normally

received from investments.

2. The trustees of the funds involved shall monitor the market value

of the loaned marketable securities daily. In no event shall the

trustees allow the value of collateral posted to fall below the market

value of the loaned marketable securities.

3. The term "security loan agreement", as used in this section, shall

mean a written contract whereby a fund (the lender) agrees to lend

marketable securities for a period not to exceed one year, subject,

however, to the following limitations:

(a) The lender must retain the right to collect from the borrower all

dividends, interest, premiums, rights, and any other distributions to

which the lender would otherwise have been entitled,

(b) The lender may waive the right to vote the securities during the

term of the loan,

(c) The lender must retain the right to terminate the contract upon

not more than five business days' notice.

(d) The borrower shall provide collateral to the lender in the form of

cash, bonds, or performance letters of credit drawn on a bank with

capital, surplus and undivided earnings in excess of one hundred million

dollars, or other interest-bearing notes and obligations of the United

States or federal instrumentalities eligible for investment by a fund,

(e) The security loan agreement shall provide for payment of

additional collateral on a daily basis, or at such time as the value of

the loaned marketable securities increases to agreed upon ratios.

4. The term "marketable securities", as used in this section, shall

mean securities that are freely traded on recognized exchanges or

marketplaces.