(a) The board of trustees, in the exercise of its discretion to manage the assets of the retirement system, may select a person, including a commercial bank or depository trust company, to lend retirement system securities as provided by this section and rules adopted by the board of trustees.
(b) To be eligible to lend securities under this section, a person must:
(1) be experienced in the operations of a fully secured securities lending program;
(2) maintain capital adequate in the prudent judgment of the retirement system to assure the safety of the securities;
(3) execute an indemnification agreement, satisfactory in form and content to the retirement system, fully indemnifying the retirement system against any loss resulting from borrower default or the failure of the securities lending agent to properly execute the agent’s responsibilities under the applicable securities lending agreement;
(4) require any securities broker or dealer to whom the agent lends securities belonging to the retirement system to deliver and maintain with the custodian collateral in the form of cash or United States government securities eligible for book entry, the market value of which must equal not less than 100 percent of the market value, from time to time, of the loaned securities; and
(5) comply with the guidelines adopted by the board of trustees relating to the investment of cash collateral, borrower limits, and other items.