This rulemaking modernizes the regulatory criteria and procedures for chapter 280, Florida Statutes, the Florida Security for Public Deposits Act (the Act). Modernization of the Act includes simplifying and clarifying the ....

 

DEPARTMENT OF FINANCIAL SERVICES

Division of Treasury

RULE NOS.:RULE TITLES:

69C-2.001Purpose

69C-2.002Scope

69C-2.004Definitions

69C-2.005Qualifications for Participation by Banks and Savings Associations

69C-2.0051Change to a Qualified Public Depository or Operating Subsidiary

69C-2.006Administration of Collateral Requirements

69C-2.0061Maintenance of Pledged Collateral

69C-2.007Eligible Collateral Criteria and Restrictions

69C-2.009Forms

69C-2.0095Electronic Data Transmission of Information, Reports, and Forms

69C-2.010Additional Reports and Inspections

69C-2.011Interim Reports by the Chief Financial Officer

69C-2.016Financial Information Reports by a Qualified Public Depository

69C-2.021Assessment Calculation

69C-2.022Requirements of Public Depositors

69C-2.024Criteria and Guidelines to be Used by the Chief Financial Officer in Administering and Protecting the Integrity of the Public Deposits Program

69C-2.026Administration of Payment of Losses

69C-2.027Effective Date of Withdrawal Due to an Acquisition or Merger

69C-2.028Ownership of Collateral by an Operating Subsidiary of the Qualified Public Depository

69C-2.029Authorized Agent

69C-2.030Use of Agents by Custodians of Collateral

69C-2.031Format for Confirmations from Custodians

69C-2.032Execution of Forms, Proof of Authorization

69C-2.034Disqualification, Suspension, and Administrative Penalty

PURPOSE AND EFFECT: This rulemaking modernizes the regulatory criteria and procedures for chapter 280, Florida Statutes, the Florida Security for Public Deposits Act (the Act). Modernization of the Act includes simplifying and clarifying the regulatory criteria and processes, including improving the functionality of the incorporated material. This rulemaking also, in part, implements section 70 of chapter 2024-140, Laws of Florida, which promulgates section 280.042, Florida Statutes, effective July 1, 2024. Section 280.042 sets forth policies whereby credit unions may participate as a qualified public depository in the public deposits program with certain limitations. A new rule, 69C-2.0051, is proposed to clarify when a qualified public depository must execute new Act agreements and resolutions and report a change in name and/or address. A new rule, 69C-2.0061, is proposed to simplify the process for a qualified public depository to deposit or pledge the required collateral, which combines the functionality of three (3) forms into one (1). A new rule, 69C-2.016, clarifies and simplifies the criteria and process for a qualified public depository to submit monthly, preliminary, and annual reports. A new rule, 69C-2.034, is proposed to establish the criteria and process for discipline of a qualified public depository or an applicant seeking designation as a qualified public depository. Rules to be repealed include: 69C-2.001, 2.002, 2.009, 2.0095, 2.011, and 2.021. The rationale for each repeal is due to the rules being unnecessary or duplicative of statute.

SUMMARY: This rulemaking includes simplifying, clarifying, and improving the functionality of the regulatory criteria and processes relating to the Act, as well as implementing section 70 of chapter 2024-140, Laws of Florida.

SUMMARY OF STATEMENT OF ESTIMATED REGULATORY COSTS AND LEGISLATIVE RATIFICATION:

The Agency has determined that this will not have an adverse impact on small business or likely increase directly or indirectly regulatory costs in excess of $200,000 in the aggregate within one year after the implementation of the rule. A SERC has not been prepared by the Agency.

The Agency has determined that the proposed rule is not expected to require legislative ratification based on the statement of estimated regulatory costs or if no SERC is required, the information expressly relied upon and described herein: The Department’s economic analysis of the potential impact of the proposed rule amendments determined that there will be no adverse economic impact or increased regulatory costs that would require legislative ratification.

Any person who wishes to provide information regarding a statement of estimated regulatory costs, or provide a proposal for a lower cost regulatory alternative must do so in writing within 21 days of this notice.

RULEMAKING AUTHORITY: 280.04, 280.041, 280.052, 280.054, 280.07, 280.10, 280.13, 280.16, 280.17, 280.19, FS.

LAW IMPLEMENTED: 17.57, 120.60, 280.01, 280.02, 280.025, 280.03, 280.04, 280.041, 280.042, 280.05, 280.051, 280.052, 280.053, 280.54, 280.055, 280.06, 280.07, 280.08, 280.085. 280.09. 280.10, 280.11, 280.13, 280.16, 280.17, 280.18, FS.

A HEARING WILL BE HELD AT THE DATE, TIME AND PLACE SHOWN BELOW:

DATE AND TIME: July 11, 2024, 10:30 a.m.

PLACE: Please join my meeting from your computer, tablet or smartphone. https://global.gotomeeting.com/join/626020717

You can also dial in using your phone. United States (Toll Free): 1(866)899-4679, United States: [phone], Access Code: 626-020-717

Join from a video-conferencing room or system. Dial in or type: 67.217.95.2 or inroomlink.goto.com, Meeting ID: 626 020 717 or dial directly: 626020717@67.217.95.2 or 67.217.95.2##626020717

Pursuant to the provisions of the Americans with Disabilities Act, any person requiring special accommodations to participate in this workshop/meeting is asked to advise the agency at least 7 days before the workshop/meeting by contacting: Sarah Pons, Bureau Chief, Bureau of Collateral Management, at [e-mail], or [phone]. If you are hearing or speech impaired, please contact the agency using the Florida Relay Service, 1(800)955-8771 (TDD) or 1(800)955-8770 (Voice).

THE PERSON TO BE CONTACTED REGARDING THE PROPOSED RULE IS: Sarah Pons, Bureau Chief, Bureau of Collateral Management, at [e-mail], or [phone].

 

THE FULL TEXT OF THE PROPOSED RULE IS:

69C-2.001 Purpose

Rulemaking Authority , 280.041(7), 280.19 FS. Law Implemented 280 FS. History–New 2-25-82, Amended 11-29-84, Formerly 4C-2.01, Amended 6-28-88, Repromulgated 1-23-91, Formerly 4C-2.001, Repealed       .

 

69C-2.002 Scope

Rulemaking Authority 280.19, 280.041(7) FS. Law Implemented 280 FS. History–New 2-25-82, Amended 11-29-84, Formerly 4C-2.02, Amended 4-10-86, 6-28-88, 1-23-91, 7-12-92, Formerly 4C-2.002, Repealed       .

 

Substantial rewording of Rule 69C-2.004 follows. See Florida Administrative Code for present text.

69C-2.004 Definitions

For the purpose of this chapter, the term:

(1) “Applicant” means an entity seeking designation by the Chief Financial Officer as a qualified public depository in the public deposits program.

(2) “Certificate of incumbency” means a document executed pursuant to the corporation’s bylaws certifying a corporate officer has the authority to act on behalf of and bind the corporation with respect to an underlying transaction.

(3) “Chief Financial Officer” has the same meaning as in section 17.001, Florida Statutes (F.S.).

(4) “Collateral arrangement agreement,” also referred to as a “collateral arrangement” or “collateral agreement,” means an agreement or agreements to protect the interest of the state of Florida through the use of collateral executed under oath that meets the requirements of Rule 69C-2.032, Florida Administrative Code (F.A.C.), and is signed by the Chief Financial Officer. Depending on the collateral being pledged, a collateral arrangement agreement includes one or more of the following:

(a) Form DFS-J1-1001, Collateral Control Agreement, effective _____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____;

(b) DFS-J1-1014, Cash Arranagement Agreement, effective _____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____; or

(c) Form DFS-J1-1510, the Federal Home Loan Bank Letters of Credit Agreement, effective _____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____.

(5) “Custodian” has the same meaning as in section 280.02, F.S.

(6) “Delegate of the public depositor” means an individual with authority to execute forms on behalf of the public depositor, as established by a copy of:

(a) the organization’s internal documentation, signed by the official custodian, stating the delegation of authority by name or title;

(b) the minutes of a board meeting evidencing adoption of a resolution by the organization's board of directors authorizing the individual signing the form by name or title to sign such a document on behalf of the organization; or

(c) the organization's charter, constitution, bylaws, or other evidence of the governing body, authorizing the individual signing the form by name or title to sign such a document on behalf of the organization.

(7) “Federal Home Loan Bank Member Resolution” means Form DFS-J1-1535, Federal Home Loan Bank Member Resolution, effective ____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____.

(8) “Official custodian” has the same meaning as established in 12 C.F.R. § 330.15.

(9) “Offset” means the right which exists between two parties each of whom, under an independent contract, owes an ascertained amount to the other to set off their respective debts by way of mutual deduction.

(10) “Operating subsidiary” has the same meaning as in section 280.02, F.S.

(11) “Pledgor” has the same meaning as in section 280.02, F.S.

(12) “Public deposit” has the same meaning as in section 280.02, F.S.

(13) “Public depositor” has the same meaning as in section 280.02, F.S.

(14) “Public deposits program” has the same meaning as in section 280.02, F.S.

(15) “Qualified public depository” has the same meaning as in section 280.02, F.S.

(16) “Qualifying change” means an organizational change that impacts the enforcability of any agreement as it relates to the public deposits program in which the Chief Financial Officer is a party.

(17) “Report date” means the finalized date of a report.

(18) “Required collateral" has the same meaning as in section 280.02, F.S.

(19) “Special identification number” means an identifying number assigned by the Chief Financial Officer of a qualified public depository provided to a custodian.

Rulemaking Authority 280.04, 280.041, 280.10, 280.13, 280.19, 280.041(7) FS. Law Implemented 17.001, 175.301, 185.30, 280.02, 280.03, 280.04, 280.041, 280.05(16), 280.10, 280.13, 280.16(1)(b), 631.221 FS. History–New 2-25-82, Amended 5-17-84, 11-29-84, Formerly 4C-2.04, Amended 4-10-86, 6-28-88, 1-23-91, 7-12-92, 5-27-97, 4-5-99, Formerly 4C-2.004, Amended      .

 

Substantial rewording of Rule 69C-2.005 follows. See Florida Administrative Code for present text.

69C-2.005 Designation of a Qualified Public Depository Qualifications for Participation by Banks and Savings Associations

(1) To be an applicant, an entity must submit the following in accordance with the instructions therein:

(a) Form DFS-J1-1516, Application or Reapplication for Designation, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____;

(b) Form DFS-J1-1000, Contingent Liability Agreement, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____;

(c) Form DFS-J1-1511, Qualified Public Depository Resolutions, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____;

(d) Form DFS-J1-1013, Attestation Statement for Qualified Public Depositories, effective _____, incorporated by reference in Rule 69C-2.033, F.A.C.; and

(e) if using an operating subsidiary, complete and submit Form DFS-J1-1512, Operating Subsidiary Resolutions, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____.

(2) After meeting the requirements of subsection (1), the Chief Financial Officer will determine if the applicant meets:

(a) the definition of a qualified public depository, except for designation, as stated in section 280.02, F.S.; and

(b) the financial rating established for entry in the public deposits program pursuant to section 280.04, F.S., and Rule 69C-2.024, F.A.C.

(3) After the applicant has met the requirements of subsection (2), the Chief Financial Officer will, except as provided in chapter 280, F.S., notify the applicant in writing that before it can be designated by the Chief Financial Officer as a qualified public depository, it must:

(a) submit a completed collateral arrangement agreement, as defined in Rule 69C-2.004, F.A.C.;

(b) complete the required deposit of collateral in accordance with section 280.04, F.S., and Rules 69C-2.006 and 69C-2.0061, F.A.C.; and

(c) if required, submit a signed statement pursuant to section 280.042, F.S.

(4) After the applicant has met the requirements of subsection (3), the Chief Financial Officer will designate it as a qualified public depository.

(5) If an entity seeking designation as a qualified public depository does not meet the criteria to be designated as established in this Rule and Chapter 280, F.S., the Chief Financial Officer will notify it in writing of this determination.

(6) A qualified public depository must assign and maintain a primary contact as the individual responsible for the institution’s overall participation in the public deposits program. A secondary contact may also be assigned by the qualified public depository.

(a) The  primary and any secondary contact will be as indicated by the qualified public depository in the Form DFS-J1-1516, Application or Reapplication for Designation, incoporated by reference in paragraph (1)(a).

(b) Should an individual fufilling either the primary or secondary contact role change, a qualified public depository must update the Chief Financial Officer in the next submission of Form DFS-J1-1003, Qualified Public Depository Monthly Report, incorporated by reference in Rule 69C-2.016, F.A.C.

Rulemaking Authority 280.04, 280.041, 280.10, 280.19, 280.041(7) FS. Law Implemented 120.60, 280.02(11), 280.025, 280.04(1), 280.04, 280.041, 280.042, 280.05, 280.07, 280.16, FS. History–New 2-25-82, Amended 11-29-84, Formerly 4C-2.05, Amended 4-10-86, 6-28-88, 1-23-91, 7-12-92, Formerly 4C-2.005, Amended      .

 

69C-2.0051 Change to a Qualified Public Depository or Operating Subsidiary

(1) In the event of a qualifying change, as defined in Rule 69C-2.004, F.A.C., to a qualified public depository or operating subsidary, the entity or entities must re-execute and provide to the Chief Financial Officer, within 30 calendar days of such qualifying change:

(a) the collateral arrangement agreement;

(b) Form DFS-J1-1000, Contingent Liability Agreement, incorporated by reference in Rule 69C-2.005, F.A.C.;

(c) Form DFS-J1-1511, Qualified Public Depository Resolutions, incorporated by reference in Rule 69C-2.005, F.A.C.; and

(d) if using an operating subsidiary, Form DFS-J1-1512, Operating Subsidiary Resolutions, incorporated by reference in Rule 69C-2.005, F.A.C.

(2) For a qualified public depository or operating subsidiary to report a change in name or address to the Chief Financial Officer within 30 calendar days after the effective date of the change, it must complete and submit Form DFS-J1-1003, Qualified Public Depository Monthly Report, incorporated by reference in subsection 69C-2.016(1), F.A.C.

Rulemaking Authority 280.041, 280.10, 280.19 FS. Law Implemented 280.041, 280.05, 280.10 FS. History–New       .

 

Substantial rewording of Rule 69C-2.006 follows. See Florida Administrative Code for present text.

69C-2.006 Administration of Collateral Requirements

(1) Each qualified public depository must deposit with or pledge to the Chief Financial Officer eligible collateral equal to or in excess of its required collateral.

(2) Prior to initiating a collateral transaction, the qualified public depository must ensure a current collateral arrangement agreement is on file with the Chief Financial Officer.

(3) If using cash as collateral and the Chief Financial Officer as the custodian,  the qualified public depository must complete and submit Form DFS-J1-1010, Proof of Authority, effective ____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____.

(4) To comply with section 280.04, F.S., a qualified public depository must evaluate its public deposits on a daily basis.

(5) Pursuant to sections 280.04, 280.05, 280.11, 280.16, F.S., and Rule 69C-2.024, F.A.C., the Chief Financial Officer will notify a qualified public depository in writing of any special instructions, which may include an increase in the collateral-pledging level. The qualified public depository must comply with the Chief Financial Officer’s special instructions.

Rulemaking Authority 280.19, 280.04, 280.041(7), 280.19, FS. Law Implemented 280.02, 280.04, 280.05(16), 280.0016(1)(b), 280.16, FS. History–New 2-25-82, Amended 11-29-84, Formerly 4C-2.06, Amended 4-10-86, 6-28-88, 1-23-91, 7-12-92, Formerly 4C-2.006, Amended      .

 

69C-2.0061 Maintenance of Pledged Collateral

(1) The deposit or pledge of collateral must be made by completing the transaction and simultaneously submitting to the Chief Financial Officer a completed Form DFS-J1-1005, Collateral Transaction Form, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____.

(2) Except as provided in section 280.041, F.S., a substitution of collateral may be made by completing the transaction and simultaneously submitting to the Chief Financial Officer a completed Form DFS-J1-1005, Collateral Transaction Form.

(3) To intitiate a withdrawal of collateral request, a qualified public depository must submit a completed Form DFS-J1-1005, Collateral Transaction Form.

(4) To initiate a transfer of pledged collateral at the same custodian, a qualified public depository must submit a completed Form DFS-J1-1005, Collateral Transaction Form.

(5) To intitiate a transfer of previously pledged collateral between custodians, a qualified public depository must submit a completed Form DFS-J1-1005, Collateral Transaction Form, to the Chief Financial Officer and provide copies to both the recipient custodian and releasing custodian.

(6) The Chief Financial Officer will evaluate each collateral transaction and request for a collateral transaction pursuant to section 280.13, F.S., and Rule 69C-2.007, F.A.C. The Chief Financial Officer will respond in writing to the qualified public depository and custodian or custodians.

Rulemaking Authority 280.19, 280.041 FS. Law Implemented 280.02, 280.04, 280.041, 280.05 FS. History–New       .

 

Substantial rewording of Rule 69C-2.007 follows. See Florida Administrative Code for present text.

69C-2.007 Eligible Collateral Criteria and Restrictions

(1) All eligible securities pursuant to section 280.13, F.S., must be pledged in a book entry form.

(2) Collateralized Mortgage Obligations (CMOs) or Real Estate Mortgage Investment Conduits (REMICs):

(a) must be a direct obligation of a U.S. Agency;

(b) must be in book entry form;

(c) must not include private label issues; and

(d) must not include the following classes:

1. interest only;

2. principal only;

3. residual; or

4. zero.

(3) To support evaluation of collateral eligibility, the Chief Financial Officer may request, in writing, supporting documentation the Chief Financial Officer deems necessary pursuant to sections 280.05 and 280.13, F.S.

(4) In the event that the Chief Financial Officer notifies the qualified public depository that the Chief Financial Officer cannot reasonably determine the rating of any proposed collateral, the qualified public depository must submit, and continue to submit on a weekly basis, documentation that supports rating adequacy that meets the requirements of section 280.13(3), F.S.

(5) Pursuant to section 280.13(5), F.S., letters of credit issued by a Federal Home Loan Bank may be submitted electronically to the Chief Financial Officer.

(6) To the extent necessary to protect the integrity of the public deposits program, the Chief Financial Officer may limit the pledging of the instruments set out in subsections (1), (2), and (3), to a percentage of the total collateral pledged by the qualified public depository in accordance with his or her powers enumerated in section 280.05, F.S.

(7) The following instruments or securities will not be acceptable as collateral:

(a) loans of any type; and

(b) repurchase and reverse repurchase agreements (REPO).

Rulemaking Authority 280.041, 280.13(2), (5), 280.19, 280.041(7) FS. Law Implemented 280.04(1), 280.05, 280.13, FS. History–New 2-25-82, Amended 11-29-84, Formerly 4C-2.07, Amended 4-10-86, 6-28-88, 1-23-91, 7-12-92, Formerly 4C-2.007, Amended       .

 

69C-2.009 Forms

Rulemaking Authority 280.19, 280.041(7) FS. Law Implemented 280.04(4), 280.041, 280.05, 280.16, 280.17 FS. History–New 2-25-82, Amended 5-17-84, 11-29-84, Formerly 4C-2.09, Amended 4-10-86, 6-28-88, 1-23-91, 7-12-92, 2-1-93, 5-27-97, 4-5-99, Formerly 4C-2.009, Repealed      .

 

69C-2.0095 Electronic Data Transmission of Information, Reports, and Forms

Rulemaking Authority 280.19 FS. Law Implemented 280.05(16), (19), 280.16 FS. History–New 1-23-91, Formerly 4C-2.025, Amended 7-12-92, 4-5-99, Formerly 4C-2.0095, Repealed       .

 

Substantial rewording of Rule 69C-2.010 follows. See Florida Administrative Code for present text.

69C-2.010 Inspection and Verification of Financial Information Additional Reports and Inspections

Each qualified public depository and custodian must electronically provide or otherwise permit the Chief Financial Officer to inspect, verify, and review all documents, reports, records, and all other financial information deemed necessary by the Chief Financial Officer to verify compliance with chapter 280, F.S. and this rule chapter.

Rulemaking Authority 280.041, 280.19, FS. Law Implemented 280.02, 280.04, 280.041, 280.05, 280.051, 280.16, FS. History–New 2-25-82, Amended 11-29-84, Formerly 4C-2.10, Amended 4-10-86, 6-28-88, 1-23-91, 7-12-92, Formerly 4C-2.010, Amended      .

 

69C-2.011 Interim Reports by the Chief Financial Officer

Rulemaking Authority 280.04(9), 280.19 FS. Law Implemented 280.01-.05, 280.07, 280.08, 280.09, 280.10, 280.11, 280.13, 280.16, 280.17, 280.18, 280.19 FS. History–New 2-25-82, Amended 11-29-84, Formerly 4C-2.11, Amended 4-10-86, 6-28-88, Repromulgated 1-23-91, Amended 7-12-92, Formerly 4C-2.011, Repealed      .

 

69C-2.016 Financial Information Reports by a Qualified Public Depository

(1) Each qualified public depository must electronically submit to the Chief Financial Officer a completed Form DFS-J1-1003, Qualified Public Depository Monthly Report, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____, on or before the 15th calendar day, or next business day, if the due date falls on a weekend or a Federal Reserve Bank holiday.

(2) If a qualified public depository’s total public deposits decreases by a minimum of twenty-five percent (25%) over the average daily balance of the previously reported month, and the qualified public depository wishes to release pledged collateral, the qualified public depository must submit DFS-J1-1003, Qualified Public Depository Monthly Report, as a preliminary report. A preliminary report does not satisfy the monthly report requirement pursuant to subsection (1) above and section 280.16, F.S.

(3) Each qualified public depository must complete Form DFS-J1-1004, Qualified Public Depository Annual Report, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____, on or before November 30th, as required by section 280.16, F.S.

Rulemaking Authority 280.05, 280.16 FS. Law Implemented 280.05, 280.16, 280.042 FS. History–New       .

 

69C-2.021 Assessment Calculation

Rulemaking Authority 280.04(9), 280.19 FS. Law Implemented 280.08(3) FS. History–New 6-28-88, Amended 1-23-91, 7-12-92, Formerly 4C-2.021, Repealed       .

 

Substantial rewording of Rule 69C-2.022 follows. See Florida Administrative Code for present text.

69C-2.022 Requirements of Public Depositors

(1) Each public depositor must electronically submit a completed Form DFS-J1-1009, Public Depositor Annual Report, effective _____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____, annually, no later than November 30, to the Chief Financial Officer, as required by section 280.17, F.S.

(2) Upon a public depositor opening a public deposit account, it must complete Form DFS-J1-1295, Public Deposit Identification and Acknowledgment Form, effective _____, incorporated herein by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____, and maintain the completed form as required by section 280.17, F.S.

Rulemaking Authority 280.19, 280.041(7) FS. Law Implemented 280.17, 280.042, FS. History–New 6-28-88, Amended 1-23-91, 7-12-92, 4-5-99, Formerly 4C-2.022, Amended      .

 

Substantial rewording of Rule 69C-2.024 follows. See Florida Administrative Code for present text.

69C-2.024 Criteria for Assigning Minimum Pledge Percentages and Guidelines to be Used by the Chief Financial Officer in Administering and Protecting the Integrity of the Public Deposits Program

(1) Entry, withdrawal, and continued participation in the public deposits program will be based, in part, on the overall financial condition of an applicant or a qualified public depository.

(2) The overall financial condition of an applicant or a qualified public depository is determined by an analysis of:

(a) ratios derived from the institution’s Call Report or 5300 Call Report;

(b) trends experienced by the institution;

(c) the institution’s average financial condition rating from two nationally recognized financial rating services, published quarterly; and

(d) any other information relating to the institution that the Chief Financial Officer determines pertient.

(3) Except as provided in section 280.04, F.S., the following numerical parameters for entry, withdrawal, and collateral pledging levels will apply for an applicant or a qualified public depository. Using a scale of zero (0) to 100, an institution with a quarterly average combined rating over the four most recent quarters of:

(a) 20 or more, may join the public deposits program.

(b) Zero (0) through 15 must withdraw from the public deposits program or meet the following conditions pursuant to an alternative participation agreement through Form DFS-J1-1518, Alternative Participation Agreement, effective _____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____, as an alternative to withdrawing:

1. establish a maximum amount of public deposits the institution may hold, which is mutually agreed upon by and between the Chief Financial Officer and the institution;

2. deposit or pledge eligible collateral equal to one hundred and fifty percent (150%) of the amount of public deposits agreed to pursuant to subparagraph 1;

3. if required by the Chief Financial Officer pursuant to section 280.041(6), F.S., use a Chief Financial Officer’s custodian to safekeep all required collateral and be bound by a Chief Financial Officer’s custodial contract as directed by the Chief Financial Officer; and

4. submit each month, and whenever requested by the Chief Financial Officer, a schedule listing all public deposits accounts and balances held for the credit of all public depositors.

(c) 16 through 29 must pledge collateral at a one hundred and ten percent (110%) level.

(d) at the discretion of the Chief Financial Officer, 30 through 69 may pledge collateral at a fifty percent (50%) level.

(e) at the discretion of the Chief Financial Officer, 70 and above may pledge collateral at a twenty-five percent (25%) level.

(4) On a quarterly basis, the Chief Financial Officer will review the average rating of each qualified public depository and will notify each qualified public depository whose collateral pledging level and requirements has changed, and any other action required or relevant to the institution’s continued participation in the public deposits program.

(5) The Chief Financial Officer may assign a collateral pledging level that differs from those recommended in paragraph (3) where:

(a) the Chief Financial Officer’s analysis indicates that a qualified public depository’s current financial condition is either stronger or weaker than the latest average financial condition rating indicates;

(b) a qualified public depository is subject to a regulatory or enforcement action that cites safety and soundness considerations;

(c) a qualified public depository violates any provision of chapter 280, F.S. or this rule chapter;

(d) a material event occured involving the qualified public depository or the banking sector as a whole that threatens the integrity of the public deposits program; or

(e) the Chief Financial Officer deems the exception necessary pursuant to section 280.05, F.S.

Rulemaking Authority 280.04(1), 280.19 FS. Law Implemented 280.04, 280.05(6), 280.16, 280.17 FS. History–New 1-23-91, Amended 7-12-92, Formerly 4C-2.024, Amended      .

 

Substantial rewording of Rule 69C-2.026 follows. See Florida Administrative Code for present text.

69C-2.026 Administration of Payment of Losses

In the event of the insolvency or default of a qualified public depository, each public depositor having a claim against the Public Deposits Trust Fund must file a claim with the Chief Financial Officer consistent with section 280.085, F.S., on Form DFS-J1-1012, Public Deposits Claim Form and Agreement, effective _____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____. Along with the claim form, the public depositor must submit:

(1) proof of authority as specified by Rule 69C-2.032, F.A.C.; and

(2) Form DFS-J1-1295, Public Deposit Identification and Acknowledgment, incorporated by reference in Rule 69C-2.022, F.A.C., for each respective public deposit account.

Rulemaking Authority 280.19 FS. Law Implemented 280.042, 280.08, 280.085, 280.10, 280.17(1)(b), FS. History–New 7-12-92, Amended 2-1-93, 4-5-99, Formerly 4C-2.026, Amended      .

 

Substantial rewording of Rule 69C-2.027 follows. See Florida Administrative Code for present text.

69C-2.027 Voluntary Withdrawal Effective Date of Withdrawal Due to an Acquisition or Merger

To withdrawal a designation as a qualified public depository, the qualified public depository must submit Form DFS-J1-1519, Notice of Withdrawal, effective _____, incorporated by reference and available at http://www.flrules.org/Gateway/reference.asp?No=Ref-_____.

Rulemaking Authority 280.10(7), 280.19 FS. Law Implemented 280.09(2), 280.10, 280.11 FS. History–New 7-12-92, Formerly 4C-2.027, Amended       .

 

Substantial rewording of Rule 69C-2.028 follows. See Florida Administrative Code for present text.

69C-2.028 Ownership of Collateral by an Operating Subsidiary of the Qualified Public Depository

Collateral securing public deposits may, at the discretion of the qualified public depository, be owned in the name of an operating subsidiary if:

(1) 100% of the stock of the operating subsidiary is owned and controlled by the qualified public depository;

(2) the operating subsidiary is a party to and bound by all the terms of Form DFS-J1-1000, Contingent Liability Agreement, incorporated by reference in Rule 69C-2.005, F.A.C.;

(3) the operating subsidiary is a party to and bound by all the terms of Form DFS-J1-1001, Collateral Control Agreement, incorporated by reference in Rule 69C-2.004, F.A.C.;

(4) the operating subsidiary is a party to and bound by all the terms of DFS-J1-1014, Cash Arrangement Agreement, incorporated by reference in Rule 69C-2.004, F.A.C., when using cash as collateral and the Chief Financial Officer as the custodian;

(5) both the board of directors for the qualified public depository and the board of directors for the operating subsidiary have approved Forms DFS-J1-1000, Contingent Liability Agreement, incorporated by reference in Rule 69C-2.005, F.A.C.; DFS-J1-1001, Collateral Control Agreement, incorporated by reference in Rule 69C-2.004, F.A.C.; and DFS-J1-1014, Cash Arrangement Agreement, incorporated by reference in Rule 69C-2.004, F.A.C., which must be reflected in or on:

(a) the minutes of each respective board;

(b) Form DFS-J1-1511, Qualified Public Depository Resolutions, incorporated by reference in Rule 69C-2.005, F.A.C., completed by the qualified public depository; and

(c) Form DFS-J1-1512, Operating Subsidiary Resolutions, incorporated by reference in Rule 69C-2.005, F.A.C., completed by the operating subsidiary;

(6) the Chief Financial Officer does not disapprove the ownership of the collateral by the operating subsidiary as determined within his or her discretionary powers set forth in section 280.041(6), F.S.; and

(7) the qualified public depository remains fully responsible and accountable for the actions of its operating subsidiary and is subject to administrative action pursuant to chapter 280, F.S.

Rulemaking Authority 280.19, 280.041(7) FS. Law Implemented 280.02, 280.04, 280.05 FS. History–New 5-27-97, Formerly 4C-2.028, Amended       .

 

Substantial rewording of Rule 69C-2.029 follows. See Florida Administrative Code for present text.

69C-2.029 Use of an Authorized Agent by a Qualified Public Depository

The use of an agent by a qualified public depository, or if one is used, by an operating subsidiary, is prohibited.

Rulemaking Authority 280.19, 280.041(7) FS. Law Implemented 280.02, 280.04, 280.05 FS. History–New 5-27-97, Formerly 4C-2.029, Amended       .

 

Substantial rewording of Rule 69C-2.030 follows. See Florida Administrative Code for present text.

69C-2.030 Use of an Agent Agents by a Custodian Custodians of Collateral

(1) The use of an agent by a custodian is prohibited unless specifically authorized by the Chief Financial Officer in writing.

(2) To request permission to use a custodial agent, the custodian must submit such request in writing to the Chief Financial Officer and include the following:

(a) proof that the agent meets the definition of a custodian in section 280.02, F.S.;

(b) a complete collateral control agreement, Form DFS-J1-1001, incorporated by reference in Rule 69C-2.004, F.A.C.; and

(c) proof of the agency relationship between the custodian and agent.

Rulemaking Authority 280.19, 280.041(7) FS. Law Implemented 280.02, 280.04, 280.05 FS. History–New 5-27-97, Formerly 4C-2.030, Amended       .

 

Substantial rewording of Rule 69C-2.031 follows. See Florida Administrative Code for present text.

69C-2.031 Confirmation Information of Pledged Collateral Format for Confirmations from Custodians

(1) To confirm information of pledged collateral, a custodian:

(a) must confirm pledged collateral:

1. whose account name on the records of the custodian is the specified pledgor; and

2. that is pledged to the Chief Financial Officer to secure public deposits pursuant to the Florida Security for Public Deposits Act;

(b) must not confirm pledged collateral that is either:

1. recorded under any account name other than the pledgor;

2. not pledged to the Chief Financial Officer; or

3. pledged for purposes other than to secure public deposits pursuant to the Florida Security for Public Deposits Act.

(2) The confirmation information of pledged collateral must contain all of the following data applicable to a specific collateral type:

(a) report date;

(b) special identification number;

(c) custodian federal employer identification number (FEIN);

(d) custodian legal name;

(e) pledgor’s legal name;

(f) pledgor’s FEIN;

(g) identifying number for collateral; and

(h) original par or face amount or number of units or shares.

(3) The custodian must restrict abbreviations used in the confirmation to those accepted industry wide.

(4) Except as provided in (5), to provide confirmation information of pledged collateral as described in subsections (1) and (2), the custodian must facilitate secure electronic data exchange, daily, to a third-party vendor procured by the Chief Financial Officer which allows access to the Florida public depository custodial accounts of each qualified public depository.

(5) Only if directed by the Chief Financial Officer, or his or her designee, a custodian must provide the confirmation information of pledged collateral as described in subsections (1) and (2), to the Chief Financial Officer electronically through email at [e-mail].

(6) Within 120 calendar days after the effective date of this Rule, a custodian must be fully compliant with subsection (4).

Rulemaking Authority 280.041, 280.19, 280.041(7) FS. Law Implemented 280.02, 280.04, 280.041, 280.05 FS. History–New 5-27-97, Formerly 4C-2.031, Amended       .

 

Substantial rewording of Rule 69C-2.032 follows. See Florida Administrative Code for present text.

69C-2.032 Proof of Authority for the Execution of Forms, Proof of Authorization

(1) The following forms must be executed in accordance with subsection (2) and submitted to the Chief Financial Officer on behalf of the qualified public depository:

(a) DFS-J1-1000, Contingent Liability Agreement, incorporated by reference in Rule 69C-2.005, F.A.C.;

(b) DFS-J1-1001, Collateral Control Agreement, incorporated by reference in Rule 69C-2.004, F.A.C.;

(c) DFS-J1-1014, Cash Arrangement Agreement, incorporated by reference in Rule 69C-2.004, F.A.C.;

(d) DFS-J1-1510, Federal Home Loan Bank Letters of Credit Agreement, incorporated by reference in Rule 69C-2.004, F.A.C.;

(e) DFS-J1-1518, Alternative Participation Agreement, incorporated by reference in Rule 69C-2.024, F.A.C.;

(f) DFS-J1-1519, Notice of Withdrawal, incorporated by reference in Rule 69C-2.027, F.A.C.; and

(g) DFS-J1-1013, Attestation Statement for Qualified Public Depositories, incorporated by reference in Rule 69C-2.033, F.A.C.

(2) An individual’s proof of authority to execute a form or forms on behalf of a qualified public depository and, if one is used, an operating subsidiary, must be demonstrated by submitting one of the following to the Chief Financial Officer:

(a) Form DFS-J1-1010, Proof of Authority, incorporated by reference in Rule 69C-2.006, F.A.C.;

(b) The organization’s charter, constitution, bylaws, or other evidence of the governing body, authorizing the individual signing the form by name or title to sign such a document on behalf of the organization; or

(c) Evidence of incumbency through a certificate of incumbency for the qualified public depository.

(3) Form DFS-J1-1012, Public Deposit Claim Form and Agreement, incorporated by reference in Rule 69C-2.026 F.A.C., must be executed by an official custodian or delegate of the public depositor, as defined in 69C-2.004, F.A.C., and submitted to the Chief Financial Officer.

Rulemaking Authority 280.19, FS. Law Implemented 280.02, 280.025, 280.04, 280.05, 280.16, 280.17, FS. History–New 5-27-97, Amended 4-5-99, Formerly 4C-2.032, Amended       .

 

69C-2.034 Disqualification, Suspension, and Administrative Penalty

(1) Disciplinary guidelines. This rule establishes disciplinary procedures and guidelines supplemental to chapter 120, F.S., and sections 280.051 through 280.06, F.S., for a qualified public depository, either an applicant or designee, regarding the public deposits program. The Chief Financial Officer may impose a penalty or penalties upon a determination that a qualified public depository, applicant or designee, has violated any provision of this rule chapter or chapter 280, F.S.

(2) Procedures for Discipline. The procedures for discipline are set forth in section 280.052 and chapter 120, F.S.

(3) Mitigating and Aggravating Factors. In determining the appropriate disciplinary action to be imposed under sections 280.053 and 280.54, F.S., the Chief Financial Officer will consider aggravating and mitigating factors under the circumstances, which includes:

(a) the danger to the public health, safety, or welfare;

(b) number of counts or violations;

(c) the monetary harm caused to the state of Florida and any public depositor;

(d) the non-monetary harm caused to the state of Florida and any public depositor;

(e) whether the violation or violations were willful;

(f) the deterrent effect of the penalty imposed;

(g) improvement or correction efforts since the violation;

(h) the length of time since the date of the violation;

(i) the number of previous disciplinary cases filed against the qualified public depository; and

(j) any other relevant mitigating or aggravating circumstances.

Rulemaking Authority 280.052, 280.19 FS. Law Implemented 280.02, 280.025, 280.03, 280.04, 280.041, 280.05, 280.051, 280.052, 280.053, 280.54, 280.055, 280.06, 280.07, 280.08, 280.10, 280.11, 280.13, 280.16, 280.17 FS. History–New      .

 

NAME OF PERSON ORIGINATING PROPOSED RULE: Sarah Pons, Bureau Chief

NAME OF AGENCY HEAD WHO APPROVED THE PROPOSED RULE: Jimmy Patronis, Chief Financial Officer

DATE PROPOSED RULE APPROVED BY AGENCY HEAD: July 1, 2024

DATE NOTICE OF PROPOSED RULE DEVELOPMENT PUBLISHED IN FAR: July 2, 2024