COMMITTEE SUBSTITUTE
FOR
H. B. 2973
(By Delegates H. White, Hrutkay and R. M. Thompson )
(Originating in the House Committee on Banking and Insurance)
[March 16, 2005]
A BILL to repeal §33-8A-8 of the Code of West Virginia, 1931, as
amended; and to amend and reenact §33-8A-2 and §33-8A-3 of
said code, all relating to the use of clearing corporations
and federal reserve book-entry system by insurance companies;
defining terms; allowing broker-dealers to act as custodian of
insurance company assets; establishing eligibility standards
for broker-dealers to act as custodians; eliminating
references to foreign deposit requirements; and repealing the
internal effective date.
Be it enacted by the Legislature of West Virginia:
That §33-8A-8 of the Code of West Virginia, 1931, as amended,
be repealed; and that §33-8A-2 and §33-8A-3 of said code be amended
and reenacted, all to read as follows:
ARTICLE 8A. USE OF CLEARING CORPORATIONS AND FEDERAL RESERVE BOOK-ENTRY SYSTEM.
§33-8A-2. Definitions.
As used in this article, the term:
(a) (1) "Agent" means a national bank, state bank,
or trust
company
or broker-dealer that maintains an account in its name in
a clearing corporation or that is a member of the federal reserve
system and through which a custodian participates in a clearing
corporation or the federal reserve book-entry system,
including the
Treasury/Reserve Automated Debt Entry Securities System (TRADES) or
Treasury Direct Systems, except that with respect to securities
issued by institutions organized or existing under the laws of a
foreign country,
or securities used to meet the deposit
requirements pursuant to the laws of a foreign country as a
condition of doing business therein "agent" may include a
corporation that is organized or existing under the laws of a
foreign country and that is legally qualified under those laws to
accept custody of securities;
(b) (2) "Clearing corporation"
means a corporation as defined
has the same meaning set forth in subdivision (5), subsection (a),
section one hundred two, article eight, chapter forty-six of this
code, except that with respect to securities issued by institutions
organized or existing under the laws of any foreign country,
or
securities used to meet the deposit requirements pursuant to the
laws of a foreign country as a condition of doing business therein clearing corporation may include a corporation which is organized
or existing under the laws of any foreign country and is legally
qualified under such laws to effect the transactions in securities
by computerized book entry.
Clearing corporation also includes
the Treasury/Reserve Automated Debt Entry Securities System
(TRADES) or Treasury Direct Book-Entry Systems established pursuant
to 31 C.F.R., Part 357;
(c) (3) "Custodian" means:
(A) a A national bank, state bank or trust company that shall
at all times during which it acts as a custodian pursuant to this
regulation article be no less than adequately capitalized as
determined by the standards adopted by United States banking
regulators and that is regulated by either state banking laws or is
a member of the Federal Reserve System and that is legally
qualified to accept custody of securities in accordance with the
standards set forth below, except that with respect to securities
issued by institutions organized or existing under the laws of a
foreign country,
or securities used to meet the deposit
requirements pursuant to the laws of a foreign country as a
condition of doing business therein, "custodian" may include a bank
or trust company incorporated or organized under the laws of a
country other than the United States that is regulated as such by
that country's government or an agency thereof that shall at all
times during which it acts as a custodian pursuant to this
regulation article be no less than adequately capitalized as
determined by the standards adopted by international banking
authorities and that is legally qualified to accept custody of
securities;
or
(B) A broker-dealer that is registered with and subject to
the jurisdiction of the Securities and Exchange Commission,
maintains membership in the Securities Investor Protection
Corporation, and has a tangible net worth equal to or greater than
two hundred fifty million dollars. For the purposes of this
subdivision, "tangible net worth" means shareholders' equity, less
intangible assets, as reported in the broker-dealer's most recent
annual or transition report pursuant to section 13 or 15(d) of the
Securities Exchange Act of 1934 filed with the Securities and
Exchange Commission (15 U.S.C. §78m or §78o(d));
(4) "Custodied securities" means securities held by the
custodian or its agent or in a clearing corporation, including the
Treasury/Reserve Automated Debt Entry Securities Systems (TRADES)
or Treasury Direct Systems;
(d) (5) "Direct participant" means a bank,
or trust company
or other institution
or other custodian which maintains an account
in its name in a clearing corporation and through which an
insurance company participates in a clearing corporation;
(e) (6) "Federal reserve book-entry system" means the
computerized systems sponsored by the United States Department of the Treasury and certain agencies and instrumentalities of the
United States for holding and transferring securities of the United
States government and such agencies and instrumentalities,
respectively, in federal reserve banks
and through banks which are
members of the Federal Reserve System or which otherwise have
access to such computerized systems;
(f) (7) "Member bank" means a national bank, state bank or
trust company which is a member of the Federal Reserve System and
through which an insurance company participates in the federal
reserve book-entry system;
(g) (8) "Securities" means certificated securities as defined
in subdivision (4), subsection (a), section one hundred two,
article eight, chapter forty-six of this code and uncertificated
securities as defined in subdivision (18) of
said subsection (a),
section one hundred two, article eight, chapter forty-six;
and
(9) "Security certificate" has the same meaning set forth in
subdivision (16), subsection (a), section one hundred two, article
eight, chapter forty-six of this code.
§33-8A-3. Use of book-entry systems and clearing corporations.
(a) Notwithstanding any other provision of law, a domestic
insurance company may deposit or arrange for the deposit of
securities held in or purchased for its general account and its
separate accounts in a clearing corporation or the federal reserve
book-entry system. When securities are deposited with a clearing corporation, certificates representing securities of the same class
of the same issuer may be merged and held in bulk in the name of
the nominee of the clearing corporation with any other securities
deposited with the clearing corporation by any person, regardless
of the ownership of the securities, and certificates representing
securities of small denominations may be merged into one or more
certificates of larger denominations. The records of
a member bank
any custodian through which an insurance company holds securities
in the federal reserve book-entry system
and the records of any
custodian banks through which an insurance company holds securities
in or a clearing corporation shall at all times show that the
securities are held for the insurance company and for which
accounts. Ownership of, and other interests in, the securities may
be transferred by bookkeeping entry on the books of such clearing
corporation or in the federal reserve book-entry system without, in
either case, physical delivery of certificates representing the
securities.
(b) The
insurance Commissioner is authorized to promulgate
rules
and regulations governing the deposit
of securities by
insurance companies
of securities and custodians with clearing
corporations and in the federal reserve book-entry system.
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