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FE D E R AL R E SE R V E BANK
OF N E W YORK

r C ir c u la r N o . 3 7 4 9 ~
1
A u g u s t 2 9 , 1951
J

L

A M E N D M E N T N O . 11 T O R E G U L A T IO N T O F T H E B O A R D
O F G O V E R N O R S O F T H E F E D E R A L R E S E R V E SY ST E M

T o B rokers and D ealers in Securities, M em bers o f N ational Securities
E xchanges, and Other In terested Persons, in the
Second Federal Reserve D istrict:

The Board of Governors o f the Federal Reserve System has adopted Amendment No. 11
to Regulation T. Following is the text o f the statement issued by the Board o f Governors relat­
ing to the amendment, and released for publication August 30, 1951:
The B oard o f Governors o f the Federal Reserve System has adopted an amendment making certain
minor technical changes in Regulation T, the regulation which relates to m argin requirements o f brokers,
dealers and members o f national securities exchanges.
One change excuses brokers from obtaining margin in margin accounts when the amount to be
obtained fo r transactions on a given day does not exceed $100. Another change somewhat broadens the
exemption that is already contained in the regulation fo r certain capital contribution loans to members
o f securities exchanges. Both o f these changes become effective September 3, 1951. A third change,
which becomes effective September 17, 1951, clarifies and strengthens the rules regarding the with­
drawal o f dividends that are received on securities in under-m argined accounts.

A printed copy o f Amendment No. 11 to Regulation T is enclosed; additional copies may
be obtained upon request.




*

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proul,

P r e s id e n t.

E XTE N SIO N A N D M A IN TE N AN C E OF C R ED IT
B Y B R O K E R S, D EALERS, A N D MEM BERS OF
N A T IO N A L SECURITIES EXCH AN GES
A M E N D M E N T N O . 11 T O R E G U L A T IO N T
I ssu ed

by the

B

oard op

G overnors

of th e

F

ederal

R

eser v e

S ystem

Regulation T i hereby amended in the following r s e t , the
s
epcs
amendments t se
o ctions 3(g) and 4(/) (2) t become e f c i e Septem­
o
fetv
ber 3 1951, and the amendment t sec on 6(^) t become e f c i e
,
o ti
o
fetv
September 1 , 1951:
7
1 By adding the following sentence at the end of section 3(g) :
.
In any case in which an excess s c ated, or increase s caused, by
o re
o
transactions on a given day does not exceed $100, the creditor need
not obtain the deposit s e i i d therefor in the f r t paragraph o
pcfe
is
f
section 3(6).
2 By changing section 4(/) ( t read a follows:
.
2) o
s
(2)
make l a s and may maintain l a s t or for any partner
on,
on, o
of a firm which i a member of a national s c r t e exchange t
s
euiis
o
enable such partner t make a contribution of capital t such f r ,
o
o
im
or may make and maintain subordinated loans t such a member
o
firm for capital purposes, provided (A) the lender as well as the
borrower i a partner in such f r , or (B) the borrower i a mem­
s
im
s
ber of such exchange, the lender i a corporation a lof the common
s
l
stock of which i owned di
s
rectly or indirectly by the firm or by
general partners and employees of the f r , and, i addition t the
im
n
o
fa that an appropriate committee of the exchange has approved
ct
the firm’ a f l a i n with the corporation and i s t s i d that the
s fiito
s aife
loan i not in contravention of any rule of the exchange, the loan has
s
the approval of such committee, or (C) the lender as well as the bor­
rower i a member of such exchange, the loan has the approval of an
s
appropriate committee of the exchange, and the committee, in addi­
tion t being s t s i d that the loan i not i contravention of any
o
aife
s
n
rule of the exchange, i s t s i d that the loan i outside the ordinary
s aife
s
course of the lender’ bus ess and t a , i the borrower’ firm does
s in ,
ht f
s
any dealing in s c r t e for i s own account, the loan i not for the
euiis
t
s
purpose of enabling the firm t increase the amount of such dealing;
o
3 By changing the second paragraph of section 6(g) t read as
.
o
follows:
.
A creditor may permit i t r s , dividends or other distributions
neet
received by the creditor with respect t s c r t e in a general
o euiis
account t be withdrawn from the account only on condition that
o
the adjusted debit balance of the account does not exceed the maxi


mum loan value o f the securities in the account after such with­
drawal, or on condition that (1 ) such withdrawal is made within
35 days after the day on which, in accordance with the cred itor’s
usual practice, such interest, dividends or other distributions are
entered in the account, (2 ) such entry in the account has not
served in the meantime to perm it in the account any transaction
which could not otherwise have been effected in accordance with
this regulation, and (3 ) any cash withdrawn does not represent
any arrearage on the security with respect to which it was dis­
tributed, and the current market value o f any securities withdrawn
does not exceed 10 per cent o f the current market value o f the
security with respect to which they were distributed. Failure by
a creditor to obtain in a general account any cash or securities that
are distributed with respect to any security in the account shall,
except to the extent that withdrawal would be permitted under
the preceding sentence, be deemed to be a transaction in the account
which occurs on the day on which the distribution is payable and
which requires the creditor to obtain in accordance with section
3(&) a deposit o f cash or maximum loan value o f securities at least
as great as that o f the distribution.




PRINTED

IN

NEW

YORK


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102