2022-06-28 Special Meeting Agenda

SPECIAL MEETING AGENDA   28 JUNE 2022




                         Page 30 of 79

SPECIAL MEETING AGENDA                                                                             28 JUNE 2022

              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 Financial Services Manager in accordance with
              section 259 of the Loca! 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.
                                                                                                          Page 2

                                                                                                    Page 30 of 79