2016/06/01 Council Agenda Packet

1 0 CUSTODY PROVISIONS 42. CUSTODY OF SECURITIES 42.1 Custodial Services. The Bank shall take custody of the securities owned by the Agency and tendered for transfer to its custody; provide safekeeping services for them and accept complete responsibility as an agent for their safekeeping from the moment of delivery to it and/or its transfer agent until their safe return and delivery to the Agency or its designated agent upon expiration or sooner termination of this Agreement. When ownership of a security is manifested by a certificate, bond, note, or other physical document, the Bank will verify proper registration of the security in the name of the Agency or nominee of Bank; keep the physical specimen in a secure vault, safe from destruction, damage, embezzlement, and/or other loss; readily available to the Agency; and in a condition suitable for sale or transfer. When ownership is reflected in a book entry on official records only, the Bank shall be shown on the books of the Federal Reserve System, DTC, or other depository agencies, as custodian of the Agency's book-entry security; the Bank shall verify the proper registration, evidenced by an entry in the Bank's books reflecting that the Bank holds those particular securities (or a quantity of securities that are part of a fungible bulk of government book-entry securities) as custodian for the Agency; and the Bank shall obtain and maintain the confirmatory documents in a secure area and unless expressly authorized by the Agency, keep the securities ready for immediate sale or transfer free and clear of all encumbrances. With respect to securities issued in the United States, the Shareholders Communications Act of 1985 (the "Act") requires the Bank to disclose to the issuers, upon their request,the name, address and securities position of its customers who are(a)the "beneficial owners" (as defined in the Act) of the issuer's securities, if the beneficial owner does not object to such disclosure, or (b) acting as a "respondent bank" (as defined in the Act) with respect to the securities. (Under the Act, "respondent banks" do not have the option of objecting to such disclosure upon the issuers' request.) The Act defines a"beneficial owner" as any person who has, or shares, the power to vote a security (pursuant to an agreement or otherwise), or who directs the voting of a security. The Act defines a "respondent bank" as any bank, association or other entity that exercises fiduciary powers which holds securities on behalf of beneficial owners and deposits such securities for safekeeping with a bank, such as the Bank. Under the Act, the Agency is either the"beneficial owner" or a "respondent bank." Statewide Custody Provider Program Agreement for Custody Services 19 121