2019-06-28 Special Meeting Agenda

SPECIAL MEETING AGENDA   28 JUNE 2019




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SPECIAL MEETING AGENDA                                                                      28 JUNE 2019

  INVESTMENT OF SURPLUS FUNDS POLICY

   Investment officers are to manage the investment portfolios not for speculation, but for investment
   and in accordance with the spirit of this policy. Investment officers are to avoid any transactions that
   might harm confidence in Council and will consider the safety of capital and income objectives when
   making investment decisions.
   Ethics and conflicts of interest
   Consideration will be given to ethical investment principles in determining the approved counterparty
  for investment of funds.

   Investment officers / employees shall refrain from personal activities that would conflict with the
   proper execution and management of Council’s investment portfolio. This includes activities that
  would impair the investment officer's ability to make impartial decisions. This policy requires that
  employees and investment officials disclose to the Chief Executive Officer (CEO) any conflict of
   interest or any investment positions that could be related to the investment portfolio.
   Delegation of authority
  Authority for implementation of this policy is delegated by Council to the CEO in accordance with the
   Local Government Act 2009, Section 257 (1) (b) — Delegation of local government powers.
  Authority for the day-to-day management of Council’s Investment Portfolio is to be delegated by the
   CEO to the Director Corporate Services and to the Manager Financial Services in accordance with
   section 259 of the Local Government Act 2009, and subject to regular reviews with the Director
   Corporate Services and CEO.

   GUIDING PRINCIPLES
  Council’s overall objective is to invest its funds at the most advantageous rate of interest available
  to it at the time, for that investment type, and in a way that it considers most appropriate given the
   circumstances. In priority, the order of investment activities shall be the preservation of capital,
   liquidity, and return.
   Preservation of capital
   Preservation of capital shall be the principal objective of the investment portfolio. Investments are to
   be performed in a manner that seeks to ensure security of principal of the overall portfolio. This would
   include managing credit and interest rate risk with given risk management parameters and avoiding
   any transactions that would prejudice confidence in Council or its associated entities.
   Credit Risk
   Council will evaluate and assess credit risk prior to investment. The investment officer will minimise
   credit risk in the investment portfolio by prequalifying all transactions including the brokers / securities
  dealers with which they do business, diversify the portfolio and limit transactions to secure
   investments.

   Interest Rate Risk
  The investment officer shall seek to minimise the risk of a change in the market value of the portfolio
   because of a change in interest rates. This would be achieved by measuring the investment term
   against the cash flow requirements of Council and structuring the portfolio accordingly. This will avoid
   having to sell securities prior to maturity in the open market. Secondly, interest rate risk can be limited
   by investing in shorter term securities.
   Maintenance of liquidity
  The investment portfolio will maintain sufficient liquidity to meet all reasonably anticipated operating
   cash flow requirements of Council, as and when they fall due, without incurring significant transaction
  costs due to being required to sell an investment. For these purposes, illiquid investments are
  defined as investments that are not publicly traded in sufficient volume to facilitate, under most
   market conditions, prompt sale without severe market price effect.

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