ENROLLED
COMMITTEE SUBSTITUTE
FOR
H. B. 2973
(By Delegates H. White, Hrutkay and R. M. Thompson )
[Passed April 5, 2005; in effect ninety days from passage.]
AN ACT 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be repealed; and that §33-8A-2 and §33-8A-3 of said code be amended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:
(1) "Agent" means a national bank, state bank, 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, "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;
(2) "Clearing corporation" 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, 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;
(3) "Custodian" means:
(A) A national bank, state bank or trust company that shall
at all times during which it acts as a custodian pursuant to this
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, "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 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;
(5) "Direct participant" means a bank, 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;(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;
(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;
(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 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 any custodian
through which an insurance company holds securities in the federal
reserve book-entry system 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 Commissioner is authorized to promulgate rules
governing the deposit of securities by insurance companies and
custodians with clearing corporations and in the federal reserve
book-entry system.