1. (a) Investment transactions shall be conducted only with qualified institutions. Qualified institutions shall be limited to:

   1. (1) qualified depository banks;
   2. (2) the federal reserve bank in Kansas City, Missouri;
   3. (3) primary government securities dealers, as defined in K.S.A. 75-4209 and amendments thereto;
   4. (4) broker-dealers engaged in the business of selling government securities which are registered in compliance with section 15 or 15C of the securities exchange act of 1934 and K.S.A. 17-1254, and amendments thereto; or
   5. (5) direct issuers or dealers of qualified commercial paper.

2. (b) Before conducting any transactions, each broker-dealer conducting investment transactions with the board shall document compliance with registration requirements by providing to the board:

   1. (1) proof of certification by the national association of security dealers;
   2. (2) proof of Kansas registration; and

   3. (3) upon request of the board or its designee:

      1. (A) a copy of the broker-dealer's most recent, audited annual financial statement; and
      2. (B) a copy of the broker-dealer's most recent, unaudited quarterly financial statement.

(Authorized by and implementing K.S.A. 1995 Supp. 75-4232, as amended by L. 1996, Ch. 254, Sec. 26 and K.S.A. 1995 Supp. 75-4209, as amended by L. 1996, Ch. 254, Sec. 17; effective, T-122-7-27-95, July 27, 1995; effective Nov. 17, 1995; amended Jan. 24, 1997.)