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R-102 215 BOARD OF GOVERNORS OF THE FEDERAL RESERVE 'SYST&~ STA'I'EMENT FOR THE PRESS For release in morning papers Thursday, October 28, 1937. October 27, 1937 The Board of Governors of the Federal Reserve System today adopted the following an1endment No. 10 to Regulation T, effective November 1, 1937: Amendment No. 10 of Hegulation T - Effective November 1, 1937 BE IT RESOLVED, That, effective November l, 1937, Regulation T, as amended, is further amended in the following respects: 1.. Section 2( d) of said regulation is amended to re~ad as follows: "(d) The term 'combined account' means the combination of all accounts (except '~pecial accounts') betwuen any creditor and any customer, or any group of customers acting jointly." 2. Section 2(m) of said rsgulation is amended to read as follows: ~(m) The term 1 customor 1 means any person (including any partner of a creditor firm in his relations with the firm) to or for whom, or any group of persons to or for whose joint account, a creditor is carrying any short position in securities or extending or maintaining any credit; Provided, however, That a partner shall not be deemed to be a customer of his firm within the meaning of this regulation with reference to his financial relations to the firm as reflected in his capi ta.l and ordinary drawing accounts. 11 3. Clause (2) of section 3(b) of said regulation is amended to read as follows: " ( 2) in such account trEmsactions are permitted and credit is extended or maintained solel;'l for the purpose of enabling such member, broker, or deuJer to carry accounts for his customers other than his partners, and" 216 -·2- 4. H-10~: Clause (5) of section 5(f) of said regulation is amended to read as follows: "(5) The current market value of any securities sold short in the account (other than unissued securities) plus, for each such security (other than an unissued or exempted security), such amount as the Board shall prescribe from time to time in the supplement to this regulation as the amount to be included as the margin required for such short sales, except that such amount so prescribed need not be included when there are held in the account securities exchangeable or convertible into such securities sold short;" 5. The first sentence of the last paragraph of section 5(f) of said regulation is amended to read as follows: "For the purposes of this regulation, the adjusted debit balance of every account in which any short position in securities (other than ~ issued or exempted securities) is carried or any credit is extended or maintained for the purpose of purchasing or carrying securities shall be computed in accordance with the above rules, regardless of whether it be a conibined account or a special account." The Board also adopted the following supplement to Regulation T, effective November 1, 1957: BE IT RESOLVED, That, effective November 1, 1957, the supplement to Regulation T is amended to read as follows: "BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM SUPPLEMENT TO REGULATION T Effective November 1, 1937 Maximum Loan Values. - Pursuant to the provisions of section 7 of the Securities Exchange Act of 1954 and section 5 of its Regulation T, as amended, the Board of Governors of the Federal Reserve System hereby prescribes the following maximum loan values of registered securities (other than exempted securities) for the purposes of Regulation T: 217 -·3- R-102 ( 1) General rule. - Except as provided in paragraphs ( 2) e.nd (3) of this supplement, the maximum loan value of a reglstared security (other than an exempted security) shall be 60 per cent of the current market value of the security. (2) Extension of credit to other members, brokers and dealers.The maximum lo:=m value of a registered security (other than an exempted security) in a special account with another member, broker · or dealer, which special account complies with subsection (b) of section 5 of Regulation T, as amended, shall be 75 per cent of the current market value of the security. (3) Extension of credit to distributors, syndicr:,tes, etc.The maximum loan VF.t.lue of a registered security (other than an exempted security) in a special account with a distributor, syndicate, etc., ~<hich special account complies with subsection (c) of section 3 of Regulation':', as amended,shall be 80 per cent of the current market value of the security. Margin Required On Short Sales.- Pursuant to the provlsJ.ons of section 7 of the Securities Exchange Act of 1954 and section 3 of Regulation T, as amended, the Board of Governors of the Federal Reserve System hereby prescribes that the amount to be included in the ad,justed debit balance of ~m account, pursuant to section 3(f) (3) of Regulation T, as amended, as margin required on short salos of securities (other than unissued or exempted securities) shall be 50 per cent of the current market VL~lue of each such security except that in the case of a special account with another member, broker or dealEJr, which special account complies with subsection (b) of section 3 of Regulation T, as amended, such amount shall be 35 per cent of such current market value."
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