[Code of Federal Regulations] [Title 12, Volume 6] [Revised as of January 1, 2006] From the U.S. Government Printing Office via GPO Access [CITE: 12CFR703.19] [Page 404-405] TITLE 12--BANKS AND BANKING CHAPTER VII--NATIONAL CREDIT UNION ADMINISTRATION PART 703_INVESTMENT AND DEPOSIT ACTIVITIES--Table of Contents Sec. 703.19 Investment pilot program. (a) Under the investment pilot program, NCUA will permit a limited [[Page 405]] number of Federal credit unions to engage in investment activities prohibited by this part but permitted by the Act. (b) Except as provided in paragraph (c) of this section, before a Federal credit union may engage in additional activities it must obtain written approval from NCUA. To obtain approval, a Federal credit union must submit a request to its regional director that addresses the following items: (1) Certification that the Federal credit union is ``well- capitalized'' under part 702 of this chapter; (2) Board policies approving the activities and establishing limits on them; (3) A complete description of the activities, with specific examples of how they will benefit the Federal credit union and how they will be conducted; (4) A demonstration of how the activities will affect the Federal credit union's financial performance, risk profile, and asset-liability management strategies; (5) Examples of reports the Federal credit union will generate to monitor the activities; (6) Projections of the associated costs of the activities, including personnel, computer, audit, and so forth; (7) Descriptions of the internal systems that will measure, monitor, and report the activities; (8) Qualifications of the staff and officials responsible for implementing and overseeing the activities; and (9) Internal control procedures that will be implemented, including audit requirements. (c) A third-party seeking approval of an investment pilot program must submit a request to the Director of the Office of Capital Markets and Planning that addresses the following items: (1) A complete description of the activities with specific examples of how a credit union will conduct and account for them, and how they will benefit a Federal credit union; (2) A description of any risks to a Federal credit union from participating in the program; and (3) Contracts that must be executed by the Federal credit union. (d) A Federal credit union need not obtain individual written approval to engage in investment activities prohibited by this part but permitted by statute where the activities are part of a third-party investment program that NCUA has approved under this section. [68 FR 32960, June 3, 2003, as amended at 69 FR 39832, July 1, 2004; 70 FR 55517, Sept. 22, 2005]