Tex.
Fin. Code Section 152.356
Types of Permissible Investments
(a)
The following investments are permissible under Section 152.355 (Maintenance of Permissible Investments by Money Transmission Licensee):(1)
cash, including:(A)
demand deposits;(B)
savings deposits;(C)
funds in accounts under Paragraphs (A) and (B) held for the benefit of a money transmission licensee’s customers in a federally insured depository financial institution;(D)
cash equivalents, including automated clearing house items:(i)
in transit to the money transmission licensee; and(ii)
in transit to a payee;(E)
international wires in transit to a payee;(F)
cash in transit via armored car;(G)
cash in smart safes;(H)
cash in money transmission licensee-owned locations;(I)
debit card or credit card-funded transmission receivables owed by a bank; or(J)
money market mutual funds rated “AAA” by S&P Global or an equivalent rating from an eligible rating service;(2)
certificates of deposit or senior debt obligations of an insured depository institution, as defined by Section 3, Federal Deposit Insurance Act (12 U.S.C. Section 1813) or the Federal Credit Union Act (12 U.S.C. Section 1781);(3)
an obligation:(A)
of the United States or a commission, agency, or instrumentality of the United States;(B)
that is guaranteed fully as to principal and interest by the United States; or(C)
of a state or a governmental subdivision, agency, or instrumentality of the United States;(4)
the full drawable amount of an irrevocable standby letter of credit for which the stated beneficiary is the commissioner that stipulates that the commissioner need only draw a sight draft under the letter of credit and present it to obtain funds up to the letter of credit amount on presentation of the items required by Subsection (f);(5)
100 percent of the surety bond or deposit provided for under Section 152.352 (Security for Money Transmission Licensee) that exceeds the average daily money transmission liability in this state; or(6)
stablecoin, to the extent of outstanding transmission obligations received by the licensee in the same kind of stablecoin.(b)
Unless permitted by the commissioner to exceed the limit provided, the following investments are permissible under Section 152.355 (Maintenance of Permissible Investments by Money Transmission Licensee) to the extent specified:(1)
receivables that are payable to a money transmission licensee from its authorized delegates in the ordinary course of business that are less than seven days old are permissible up to the amount of 50 percent of the aggregate value of the licensee’s total permissible investments;(2)
receivables under Subdivision (1) that are payable to a money transmission licensee from a single authorized delegate in the ordinary course of business are permissible up to the amount of 10 percent of the aggregate value of the licensee’s total permissible investments;(3)
the following investments are permissible up to the amount of 20 percent of the aggregate value of a money transmission licensee’s total permissible investments for the amount under each paragraph and the amount of 50 percent of the aggregate value of the licensee’s total permissible investments for the total amount under this subdivision:(A)
a short-term investment of not more than six months bearing an eligible rating;(B)
commercial paper bearing an eligible rating;(C)
a bill, note, bond, or debenture bearing an eligible rating;(D)
a United States tri-party repurchase agreement collateralized at 100 percent or more with United States or agency security, municipal bonds, or other security bearing an eligible rating;(E)
a money market mutual fund rated less than “AAA” and not less than “A-” by S&P Global, or the equivalent from an eligible rating service; and(F)
a mutual fund or other investment fund composed solely and exclusively of one or more permissible investments listed in Subsections (a)(1)-(3); and(4)
cash, including demand deposits, savings deposits, and funds in an account held for the benefit of a money transmission licensee’s customers at a foreign depository institution is permissible up to the amount of 10 percent of the aggregate value of the licensee’s total permissible investments if:(A)
the licensee has received a satisfactory rating in its most recent examination; and(B)
the foreign depository institution:(i)
has an eligible rating;(ii)
is registered under the Foreign Account Tax Compliance Act (Pub. L. No. 111-147);(iii)
is not located in a country subject to sanctions from the Office of Foreign Assets Control; and(iv)
is not located in a jurisdiction designated high-risk or uncooperative by the Financial Action Task Force.(c)
A letter of credit under Subsection (a)(4) must:(1)
be issued by:(A)
a federally insured depository financial institution;(B)
a foreign bank authorized under federal law to maintain a federal agency or federal branch office in a state or states; or(C)
a foreign bank that is authorized under state law to maintain a branch in a state that:(i)
bears an eligible rating or whose parent company bears an eligible rating;(ii)
is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks, credit unions, and trust companies; and(iii)
is approved by the commissioner;(2)
be irrevocable and unconditional and indicate that it is not subject to any condition or qualifications outside of the letter of credit;(3)
not contain reference to any other agreement, document or entity, or otherwise provide for a security interest in the money transmission licensee;(4)
contain an issue date and expiration date; and(5)
expressly provide for automatic extension without a written amendment for an additional period of one year from a current or future expiration date, unless the issuer of the letter of credit notifies the commissioner in writing by certified or registered mail, courier mail, or other receipted means, not more than the 60th day before any expiration date, that the irrevocable letter of credit will not be extended.(d)
On receipt of a notice of expiration or non-extension of a letter of credit issued under Subsection (c)(5), the commissioner shall require a money transmission licensee to demonstrate to the satisfaction of the commissioner, not later than the 15th day before expiration, that the licensee maintains and will maintain permissible investments in accordance with Section 152.355 (Maintenance of Permissible Investments by Money Transmission Licensee) after the letter of credit expires.(e)
If the money transmission licensee is not able to satisfactorily demonstrate to the commissioner that the licensee will maintain permissible investments under Subsection (d), the commissioner may draw on the letter of credit in an amount up to the amount necessary to meet the licensee’s requirements to maintain permissible investments in accordance with Section 152.355 (Maintenance of Permissible Investments by Money Transmission Licensee). The commissioner shall offset the draw against the money transmission licensee’s outstanding money transmission obligations. The commissioner or the commissioner’s designated agent shall hold drawn funds in trust to the extent authorized by law as agent for the benefit of the purchasers and holders of the money transmission licensee’s outstanding money transmission obligations.(f)
A letter of credit under Subsection (a)(4) must provide that the issuer of the letter of credit will honor, at sight, a presentation made by the commissioner to the issuer on or before the expiration date of the letter of credit of:(1)
the original letter of credit, including any amendments; and(2)
a written statement from the commissioner stating that:(A)
a petition has been filed by or against the money transmission licensee under the United States Bankruptcy Code (11 U.S.C. Sections 101-1532) for bankruptcy or reorganization;(B)
a petition has been filed by or against the money transmission licensee for receivership, or the commencement of any other judicial or administrative proceeding for the licensee’s dissolution or reorganization;(C)
a money transmission licensee’s assets have been seized by the commissioner under an emergency order issued in accordance with applicable law on the basis of an action, violation, or condition that has caused or is likely to cause the insolvency of the licensee; or(D)
the commissioner has received notice of expiration or non-extension of a letter of credit under Subsection (c)(5), and the money transmission licensee failed to demonstrate to the satisfaction of the commissioner under Subsection (d) that the licensee will maintain permissible investments in accordance with Section 152.355 (Maintenance of Permissible Investments by Money Transmission Licensee) on the expiration or non-extension of the letter of credit.(g)
The commissioner may designate an agent to serve on the commissioner’s behalf as beneficiary to a letter of credit if the agent and letter of credit meet requirements established by the commissioner. The commissioner’s agent may serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount for the purposes of Subsection (a)(4) are assigned to the commissioner.(h)
The commissioner may participate in multistate processes designed to facilitate the issuance and administration of letters of credit, including but not limited to services provided by the NMLS and State Regulatory Registry, LLC.
Source:
Section 152.356 — Types of Permissible Investments, https://statutes.capitol.texas.gov/Docs/FI/htm/FI.152.htm#152.356 (accessed May 18, 2024).
