# COMAR Title 31 — Maryland Insurance Administration

## Subtitle 04 — Insurers

### Chapter 09 — Custody Agreements and the Use of Clearing Corporations

#### Regulation .01 Definitions.

*COMAR 31.04.09.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) Agent.

    (a) “Agent” means:

      (i) A qualified bank or qualified 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

      (ii) With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, 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.

    (b) “Agent” includes a subcustodian.

  (2) “Carrier” means:

    (a) A domestic insurer;

    (b) A nonprofit health service plan;

    (c) A dental plan organization;

    (d) A health maintenance organization; or

    (e) A managed care organization.

  (3) Clearing Corporation.

    (a) “Clearing corporation” means:

      (i) A corporation, as defined in Commercial Law Article, §8-102(a)(5), Annotated Code of Maryland, that is organized for the purpose of effecting transactions in securities by computerized book-entry; or

      (ii) With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a corporation that is organized or existing under the laws of a foreign country and that is legally qualified under those laws to effect transactions in securities by computerized book-entry.

    (b) “Clearing corporation” includes:

      (i) Treasury Direct; and

      (ii) The Treasury/Reserve Automated Debt Entry System.

  (4) “Custodian” means a qualified bank, qualified broker/dealer, or clearing corporation that:

    (a) Accepts deposits of securities from carriers; and

    (b) Safeguards, holds, and reports on the securities under a written custodial agreement with the carrier.

  (5) “Custodied securities” means securities held:

    (a) By a custodian or its agent; or

    (b) In a clearing corporation.

  (6) “Qualified bank” means:

    (a) A bank, trust company, or federal home loan bank that:

      (i) At all times during which it acts as a custodian under this chapter is not less than adequately capitalized as determined by the standards adopted by United States banking regulators;

      (ii) Is regulated by either state banking laws or is a member of the Federal Reserve System; and

      (iii) Is legally qualified to accept custody of securities in accordance with this chapter; or

    (b) With respect to securities issued by institutions organized or existing under the laws of a foreign country or securities used to meet the deposit requirements pursuant to the laws of a foreign country as a condition of doing business in the foreign country, a bank or trust company incorporated or organized under the laws of a country other than the United States that:

      (i) Is regulated as a bank or trust company by that country's government or an agency of that country's government;

      (ii) At all times during which it acts as a custodian under this chapter is not less than adequately capitalized as determined by the standards adopted by international banking authorities; and

      (iii) Is legally qualified to accept custody of securities.

  (7) “Qualified broker/dealer” means a securities firm that:

    (a) Has a tangible net worth of at least $250,000,000 as evidenced by its most recent audited financial statement;

    (b) Is registered with and subject to the jurisdiction of the Securities and Exchange Commission; and

    (c) Maintains at all times Securities Investor Protection Corporation excess insurance coverage equal to or greater than the market value of the carriers' securities maintained with the broker/dealer.

  (8) “Registered form” has the meaning stated in Commercial Law Article, §8-102(a)(13), Annotated Code of Maryland.

  (9) Security.

    (a) “Security” has the meaning stated in Commercial Law Article, §8-102(a)(15), Annotated Code of Maryland.

    (b) “Security” includes:

      (i) A certificated security as defined by Commercial Law Article, §8-102(a)(4), Annotated Code of Maryland; and

      (ii) An uncertificated security as defined by Commercial Law Article, §8-102(a)(18), Annotated Code of Maryland.

  (10) “Treasury Direct” means the book-entry securities system:

    (a) Established pursuant to 5 U.S.C. §301, 12 U.S.C. §391, and 31 U.S.C. Subtitle III, Chapter 31; and

    (b) Governed by 31 CFR Part 357, Subpart C.

  (11) “Treasury/Reserve Automated Debt Entry System (TRADES)” means the book-entry securities system:

    (a) Established pursuant to 5 U.S.C. §301, 12 U.S.C. §391, and 31 U.S.C. Subtitle III, Chapter 31; and

    (b) Governed by 31 CFR Part 357, Subpart B.