Investment Policy

Owned by Dayna Harp (Unlicensed)
Last updated: Dec 03, 2014 by Joanna Philips (Unlicensed)

Use the following policy as a basis for creating an Investment policy that is right your organization.

 

Purpose

The purpose of this Investment Policy is to define the investment objectives, responsibilities, and general procedures for the purchase or sale of securities and/ or other investments for [ENTER ORGANIZATION’S NAME HERE].

 

Responsibility

In recognition of the timing necessary to make investments, the Board of Directors delegates’ decision-making authority for implementing this policy to the CEO or his/ her designee to implement all investment decisions in accordance with this policy statement.  However, the Board of Directors has not delegated its authority for approval of any investment decision (transaction) that would cause a net loss in excess of [ENTER AMOUNT].  Therefore, any transaction that would cause a net loss in excess of [ENTER SAME AMOUNT] needs the approval of the Board of Directors prior to the completion of the transaction.

 

Investment Objective 

The overall objective of [ENTER ORGANIZATION’S NAME HERE] is to provide the best loan and deposit service to customers while meeting the financial criteria of a perpetual business.  Since loan demand and deposit flows are uncertain, liquidity and cash management activities are required to manage the organization’s assets and liabilities.  Therefore, the objective of the investment portfolio is to support and complement liquidity and cash management activities by converting the excess cash resulting from low market demands or high deposit inflows into earning assets at market rates.  Alternately, the portfolio may be drawn from when necessary in order to accommodate loan requests, share withdrawals, or other contingencies.

 

Portfolio Composition

The investment portfolio shall consist of securities with the following characteristics:

  • Low degree of default risk.
  • Low degree of price (resale) risk resulting from drastic changes in interest rates.
  • High degree of marketability (especially for long term investments).

 

In addition to the limits placed by the [ENTER COUNTRY’S REGULATOR’S NAME HERE] this policy further limits the organization’s investment activity to the following types of securities:

  • [ENTER THE APPROVED LIST OF INVESTMENT FOR THE ORGANIZATION]
     

Liquidity

The Organization is authorized to acquire non-customer deposits, and/ or brokered deposits up to the statutory limit.

 

Securities Dealers/ Brokers

Investment transactions will be conducted only with financially sound dealers/ brokers. The approved investments / brokers are listed below.  Transactions with new firms are subject to Board of Director approval.

[ENTER THE LIST OF APPROVED INVESTMENT ORGANIZATIONS HERE]

 

Safekeeping of Securities

Securities in book entry format will be held in the following safekeeping accounts: 

[ENTER THE LOCATION OF THE SAFEKEEPING ACCOUNT – THIS IS TYPICALLY THE CORRESPONDENT BANK]

 

Securities in physical format must be held in the following safekeeping account:

 

[ENTER THE LOCATION OF THE SAFEKEEPING ACCOUNT – THIS IS TYPICALLY THE CORRESPONDENT BANK]

 

The organization will be provided a monthly statement of account for all securities in safekeeping.  In addition, the Supervisory Committee, or its appointed representative, will, on a periodic basis, confirm and physically inspect all securities held in safekeeping.

 

Payment and Delivery of Securities

The payment for securities purchased will be made by wire transfer upon delivery of securities.  Securities sold will be delivered upon receipt of payment.