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X-9466
BOARD OJ!' GOVERNORS
OF THE ,
FEDERAL HESERVJ!; SYSTEM
St~tcment
for the Press
For release in morning newspapers
of Saturday, January 25, 1936
January 24, 1956
The Board of Governors of the Federal Reserve System
today approved an amendment to Regulation T and issued a supplemcnt thereto, both effective February 1, 1956.
The amendment provides that tho margin requirements applicable to members of national security exchanges
and brokers or dm:.lors who transact a business in securities through tho medium of such racmbers shall be as prescribed
from time to time b:yr the Board of Governors of the Federal
Rt:Jsorve System in supplt!monts to the regulation.
The supplement approved
tod~y
provides that the
maximum loan value of registered securities (other than exemptod securities) shall
b.:.~
45% (inster:.d of 55%) of the cur-
rent market vr.luc of the socuri ty in those cases in which
this amount is greater than the lowest market price of the
security during the preDcr.ibec:
b~;.se
period.
Attached ure copies of the amendment and the
supplement •
•
:1_85
X-9466
SUPPLEMENT TO REGULATION
!
ISSUED BY ·rHE BOARD OF GOVEF\..'1\JOR.S OF THE FEDEHAL RESERVE SYSTEM
Effective February 1, 1956.
Maximum loan values of registered securities (other than
exempted securities) for purposes of negulation T.
Pursuant to the provlslons of section 7 of the Securities Exch;:mge Act
of 1934 and section 3 of i.t::: Eegulation T, as amended, the Board of Governors
of the Federal Reserve Systen: herob:;'· prescribes the following maximum loan
values of registnred securi tie:s (other the.n exempted securities) for the purposes of Regulation T:
(1) Gen~ rule.- Except as provided in paragraphs (2) and
(3) of this f'Upplement, the maximum loan valuo of a registered security
(other than an exempted security) shell be whichever is the higher of:
(A) 45 porccmt of the current market value of tho
security; or
(B) 100 percent of the lowest m8.rket value of the
security computed at the lowest market price therefor during the period of 56 calenda.r months immediately prior to the
first day of tho current month, but not more than 75 percent of
the current markGt value: Provided, Thnt until July 1, 1956,
for the purpose of this regulation, the lowest price at which
a security has sold on or a.ftt:r July 1, 1933, but prior to the
first dc:.y of the current month, sho.11 be considered as the lowest market price of such security during the preceding 36 calendar months; c.nd Provided, Thvt the lowest market price which
could be used under th'J provisions of this regulation during
r:_:.ny calondr,r month may be usod during the first 7 calendar days
of the succeeding cr:.lendr:r month.
(2) Extension of cr,;di t to other members, brokers and dealers. The maximum lo.~',n value of r. rcgisten::d :.oecurity (other than an exempted
security) in a spoci.::,l e,:.ccount with another mGmber, broker or dealer,
which spocic~l. ecccoun t complies with subscctbn (b) of section 3 of Regulation T, r,s amended, slwll b0 80 percent of the current market v&lue
of the security.
(3) Extension of credit to distributors, syndicates, etc. - The
maximum loan value of a registered security (other than an exempted
security) in a special account v;ith a distributor, syndicate, etc.,
which speci,,l <::.ccou..nt complies with subsection (c) of section 3 of
Regulation T, as o.moncied, shall be 80 p8rcent of the current market
value of the security.
X-9466
Amendment No, 7
of Regulation T
Effective February 1,
19~6.
Subsections (a), (b) and (c) o£ section 3 of Regulation Tare hereby amended to read as follows:
"(a) General Rule.- No creditor shall make any initial extension of credit to any customer on any registered security (other than
an exempted security) for the purpose of purchasing or carrying any
security, in an amount which causes the total credit extended on such
registered security to exceed the maximum loan value of such registered
security. Except as specifically provided elsewhere in this regulation, the maximum loan value of a registered security (other than an
exempted security) shall be the maximum loan vclue which the Board of
Governors of the Federal Reserve System shall prescribe as of general
application under this regulation from time to time in supplements to
this regulation, which will be issued in advance of the date upon which
such maximum loan value becomes effective,
"{b)
Extension of credit to other members, brokers and dealers. -
In a special account recorded separately, any creditor may extend credit
on any registered securit;y- to any other_member, broker or dealer in an
amount not greater than the maximum loan value of such security, which
(except in the case of an exempted security) shall be such special
maximum loan value as the Board of Governors of the Federal Reserve System shall prescribe for the purposes of this subsection (b) from time
to time in supplements to this reguh.tion, ·which will be issued in advance of tho date on which such maximum loan value becomes effective:
Provided, That (l) such other member, broker, or dealer is subject to
the provisions of this regulation or has places of business only in
foreign countries, (2) such credit is extended or maintained solely for
the purpose of enabling such member, broker, or dealer to carry accounts for his customers other than his partners, and (3) any credit extended or maintained by such creditor to or for such other member,
broker, or dealer for the purpose of purchasing or carrying securities
for his own account or for tho account of his firm or any of his partners shall not be included in such special account und shall be subject
to the other provisions of this section.
(c) Extension of credit to distributors, syndicates, etc, In a special account recorded separately, any creditor may extend
credit on any registered security to tho persons and for the purposes
specified below in an amount not greater than the maximum loan value
of such security, which (except in the case of an exempted security)
shall be such special maximum loan value as tho Board of Governors of
the Federal Reserve System shall prescribe for the purposes of this subsection (c) from time to time in supplements to this regulation, which
will be issued in advance of the date upon which such maximum loan
value becomes effective: Provided, That such credit is extended:
(l) To any dealer, for the purpose of financing tho distribution
of an issue of securities at wholesale or retail; or
(2) To any group, joint account or syndicate, for the purpose of
underwriting or distributing an issue of securities."
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