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(and reverse) agreements. In order to anticipate market changes and provide a level of security for all <br />funds, the collateralization level will be 100% of market value of principal and accrued interest. <br />The City of Paris chooses to limit collateral to the extent it is limited by Article 105 Revised Civil Statues <br />of Texas. Collateral will always be held by an independent third party with whom the entity has a <br />current custodial agreement. A clearly marked evidence of ownership (safekeeping receipt) must be <br />supplied to the entity and retained. The right of collateral substitution is granted. <br />10.0 SAFEKEEPING AND CUSTODY <br />All security transactions, including collateral for repurchase agreements, entered into by the City of <br />Paris shall be conducted on a delivery- versus - payment (DVP) basis. Securities will be held by a third <br />party custodian designated by the Finance Director and evidenced by safekeeping receipts. <br />11.0 DIVERSIFICATION <br />The City of Paris will diversify its investments by security type and institution. With the exception of <br />obligations of the United States or its agencies and authorized pools, no more than 50% of the City of <br />Paris total investment portfolio will be invested in a single financial institution with the exception of its <br />local depository. <br />12.0 MAXIMUM MATURITIES <br />To the extent possible, the City of Paris will attempt to match its investments with anticipated cash flow <br />requirements. Unless matched to a specific cash flow, the City of Paris will not directly invest in <br />securities maturing more than 10 years from the date of purchase. However, the City of Paris may <br />collateralize its repurchase agreements using longer -dated investments not to exceed 15 years to <br />maturity. <br />Reserve funds may be invested in securities exceeding 10 years if the maturity of such investments is <br />made to coincide as nearly as practicable with the expected use of the funds. <br />13.0 INTERNAL CONTROL <br />The Finance Director shall establish an annual process of independent review by an external auditor. <br />This review will provide internal control by assuring compliance with policies and procedures. <br />14.0 PERFORMANCE STANDARDS <br />The investment portfolio shall be designed with the objective of obtaining a rate of return throughout <br />budgetary and economic cycles, commensurate with the investment risk constraints and the cash flow <br />needs. <br />14.1 MARKET YIELD (BENCHMARK: The City of Paris investment strategy is active. Given this <br />strategy, the basis used by the Finance Director to determine whether market yields are being achieved <br />shall be the six -month U.S. Treasury Bill and the Average Fed Funds rate. <br />15.0 REPORTING <br />