(a)    State money on deposit with a financial institution shall be secured by:

(1)    deposit insurance; or

(2)    collateral as required by this section.

(b)    (1)    The collateral for State money on deposit with a financial institution:

(i)    must have, at all times, a market value that equals or exceeds the State money that is on deposit with the financial institution and is not covered by deposit insurance; and

(ii)    must be approved by the Treasurer.

(2)    If the collateral is a surety bond under § 6-202 of this subtitle:

(i)    the surety bond shall be in a form and amount acceptable to the Treasurer as determined by the Treasurer from time to time; and

(ii)    the financial institution that provides the surety bond as collateral shall immediately notify the Treasurer if the rating assigned to the issuing insurance company by any rating agency, found acceptable to the Treasurer under § 6-202 of this subtitle, is withdrawn or downgraded, in which event the financial institution shall immediately provide the Treasurer with substitute collateral permitted under § 6-202 of this subtitle.

(3)    Subject to the requirements of this subsection, a financial institution may change its collateral from time to time.

(c)    (1)    A custodian shall hold the collateral under this section for the benefit of the State.

(2)    A financial institution may use as a custodian:

(i)    any banking institution that is approved by the Commissioner of Financial Regulation to conduct commercial banking business in the State;

(ii)    a federal reserve bank; or

(iii)    any national banking association that is approved by the Comptroller of the Currency to conduct banking business in the State.

(3)    A financial institution may not be approved as custodian for the collateral of a depositary unless the assets of the financial institution equal or exceed 200% of the value of the collateral to be held for the depositary.