(a) The board of trustees, in the exercise of its discretion to manage the assets of the retirement system, may select one or more commercial banks, depository trust companies, or other entities to serve as custodian or custodians of the system's securities and to lend the securities under rules adopted by the board of trustees and as required by this section.
(b) To be eligible to lend securities under this section, a bank or brokerage firm 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; and
(4) require any securities broker or dealer to whom it lends securities belonging to the retirement system to deliver to and maintain with the custodian collateral in the form of cash or United States government securities, the market value of which must equal not less than 100 percent of the market value, from time to time, of the loaned securities.