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. FEDERAL RESERVE ' 243 3h8P69 BOARD STATEMENT FOR THE PRESS For immediate r e l e a s e October 12* 1934 CASH TRANSACTIONS RULING NO. 20 INTERPRETING REGULATION T. In response t o two i n q u i r i e s with r e s p e c t t o the time when the seven day period allowed under s e c t i o n 6 of Regulation T begins to r u n i n connection with bona f i d e cash t r a n s a c t i o n s , t h e F e d e r a l Reserve Board r u l e d t h a t : In the case of a bona f i d e cash t r a n s a c t i o n i n which a broker purchases a s e c u r i t y as agent f o r a customer and makes payment t o t h e s e l l e r of t h e s e c u r i t y , the seven day period commences t o r u n when the broker pays f o r t h e s e c u r i t y without having r e c e i v e d payment from h i s customer. . In t h e case of a bona f i d e cash t r a n s a c t i o n i n which a d e a l e r a c t ing as p r i n c i p a l or as agent f o r t h e s e l l e r s e l l s a s e c u r i t y t o a customer, the seven day p e r i o d commences t o run when t i t l e t o t h e s e c u r i t y passes t o the customer without t h e customer having paid f o r t h e s e c u r i t y * In both cases and i n a l l other cases i n v o l v i n g cash t r a n s a c t i o n s , t h e seven day p e r i o d commences t o run when the r e l a t i o n of d e b t o r and c r e d i t o r a r i s e s between t h e purchaser and the c r e d i t o r as a r e s u l t of the cash transaction. In t h i s connection, t h e Board explained t h a t t h e s o l e purpose of s e c t i o n 6 i s t o a l l o w t h e e x t e n s i o n of c r e d i t f o r l i m i t e d p e r i o d s of time i n connection with bona f i d e cash t r a n s a c t i o n s and t h a t t h i s s e c t i o n does not place any r e s t r i c t i o n s upon a bona f i d e cash t r a n s a c t i o n which does not r e s u l t i n any debtor and c r e d i t o r r e l a t i o n s h i p between t h e customer and the broker or d e a l e r .
@FedFRASER