Sec. 3. (a) As used in this section, "repurchase agreement" means an agreement:

(1) involving the purchase and guaranteed resale of securities between two (2) parties; and

(2) that may be entered into for a fixed term or arranged on an open or a continuing basis as a continuing contract that:

(A) operates like a series of overnight repurchase agreements;

(B) is renewed each day with the repurchase rate and the amount of funds invested determined daily; and

(C) for purposes of this article, is considered to have a stated final maturity of one (1) day.

(b) Each officer designated in section 1 of this chapter may enter into, with any funds that are held by the officer and available for investment, repurchase agreements:

(1) with depositories designated by the state board of finance as depositories for state deposits under IC 5-13-9.5; and

(2) involving the political subdivision's purchase and guaranteed resale of any interest-bearing obligations:

(A) issued; or

(B) fully insured or guaranteed;

by the United States, a United States government agency, an instrumentality of the United States, or a federal government sponsored enterprise.

The depository shall determine daily that the amount of money in this type of agreement must be fully collateralized by interest-bearing obligations as determined by their current market value. The collateral for this type of agreement is not subject to the provisions of section 2(c) of this chapter.

(c) If the market value of the obligations being held as collateral falls below the level required under subsection (b) or a higher level established by agreement, the depository shall deliver additional securities to the political subdivision to make the agreement collateralized to the applicable level. The collateral involved in a repurchase agreement entered into under this section is not subject to the maturity limitation provided in section 5.6 of this chapter.

(d) A political subdivision may invest in repurchase agreements without entering into a contract under IC 5-13-11 for an investment cash management system.

As added by P.L.19-1987, SEC.11. Amended by P.L.49-1988, SEC.1; P.L.41-1996, SEC.1; P.L.18-1996, SEC.13; P.L.46-1997, SEC.10; P.L.134-2000, SEC.1.