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F ederal reserve Bank of Dallas
DALLAS, T E X A S

75222

C i r c u l a r No. 78-31
M arch 21, 1978

PROPOSED AMENDMENTS TO THE SUPPLEMENTS
TO REGULATIONS C , T , AND U
P T C Listing R e q u ire m e n ts

TO ALL BANKS, BROKERS/DEALERS,
REGULATION G REGISTRANTS, AND
OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
T h e B oard of G o v e rn o rs of th e F e d e ra l R e s e rv e System h a s p ro p o s e d a
c h a n g e in r e q u ir e m e n t s fo r in c lu sio n of sto ck s on th e B o a r d 's List of O v e r - t h e C o u n te r (OTC) Sto ck s t h a t a r e s u b je c t to m a rg in r e q u i r e m e n t s .
T h e p ro p o sa l would r e q u i r e th a t to b e in c lu d e d among sto ck s on the
B o a r d 's OTC List, d e a l e r s in the stock m ust s u b m it bona fide b id s a n d offers for
t h e stock to an autom ated q u otation sy stem su c h a s NASDAQ (National A ssociation
of S e c u r itie s D e ale rs Automated Q uotations — linking m ajor b r o k e r s th r o u g h o u t the
c o u n try ) . C u r r e n t l y , sto ck s in c lu d e d on the list a r e those for w hich d e a l e r s
r e g u l a r l y p u b li s h bona fide b id s a n d o ffers.
To a n d in c o n s id e ra tio n of th is m a tte r b y the B o ard , in t e r e s te d p e r s o n s
a r e in v ited to su b m it r e l e v a n t d a ta , v i e w s , co m m en ts, o r a r g u m e n ts to the S e c r e ­
t a r y , B oard of G o v e rn o rs of th e Federal R e s e r v e S y ste m , W ash in g to n , D .C . 20551.
All comments m u st be re c e iv e d on o r b e fo re April 14, 1978. All material su bm itted
sh o u ld r e f e r to Docket No. R-0147.
A c opy of th e B o a r d 's p ro p o s a l is p r i n t e d on th e following p a g e s . Q u e s ­
tion s on th is m a tte r may be d ir e c t e d to Ms. Laura Homer, C h ief A t t o r n e y , S e c u r itie s
R eg ulatio n , Division of B anking S u p e r v is io n a n d R e g u latio n , B oard of G o v e rn o rs
of th e F ed eral R e s e rv e S y stem , W ash in g ton , D .C . 20551 (202-452-2781), o r to o u r
C o n su m e r A ffairs Section a t Ext. 6171.
S in c e re ly y o u r s ,
R o b ert H . Boykin
F ir s t Vice P r e s id e n t

Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank:
1-8 00 -492 -440 3 (intrastate) and 1 -8 00 -527 -497 0 (interstate). For calls placed locally, please use 651 plus
the extension referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

FEDERAL RESERVE SYSTEM

[12 CFR Parts 207, 220, 221]
[R e g s . O , T , U ; D o c k e t N o. R -0 1 4 7 ]

OTC LIST REQUIREMENTS
P ro p o se d Rulo

E x tra c t From
FEDERAL REGISTER,
VOL. 43, NO. 53,
F r i d a y , March 17, 1978
p p . 11214 - 11215

AGENCY: Board of Governors of the
Federal Reserve System.
ACTION: Proposed rule.
SUMMARY: These proposed amend­
ments to th e Supplem ents to Regula­
tions G, T and U will require that
dealers m ust submit bona fide bids
and offers for an OTC stock to an
automated quotation system if they
are to be counted as market-makers in
that stock for the purpose of being in­
cluded on th e Board’s List of OTC
Margin Stocks. The minimum market
maker requirements for a stock to be
included on th e List under the present
rule recognizes those dealers who
make “regularly published bona fide
bids and offers for such stock.” When
th e List was first published by th e
Board in 1969 the “pink sheets” of the
National Quotation Bureau were the
only consistent source of th e required
price information. Since that time an
automated quotation system, the Na­
tional Association of Security Dealers
Automated Quotations (NASDAQ),
has been developed to a point where
price information on all stocks on the
Board’s list can now be obtained from
it. T he Board is presently using data
from both th e “pink sheets” and
NASDAQ for its surveys.
The proposed amendment will elimi­
nate the necessity of reviewing data
from the "pink sheets” most of which
is considered duplicative and reduce
staff review and computer time.
DATE: Comments m ust be received on
or before April 14, 1978.
ADDRESS: Secretary, Board of Gov­
ernors of the Federal Reserve System,
W ashington, D C. 20551.
FOR FURTHER INFORMATION
CONTACT:
Laura Homer. Chief Attorney, Secu­
rities Regulation, Division of Bank­
ing Supervision and Regulation,
Board of Governors of the Federal
Reserve System, Washington, D.C.
20551, 202-452-2781.
SUPPLEMENTARY INFORMATION:
The Board proposes to amend the
Supplements to Regulations G, T and
U (12 CFR Parts 207, 220 and 221) to
eliminate the necessity of reviewing
data from the "pink sheets” when sur­
veying stocks for inclusion on the
Board’s List of OTC margin Stocks.
Most of th e data is now duplicative of
material from NASDAQ, and review­
ing it requires an expenditure of staff

and computer tim e no longer deemed
necessary to complete the analysis re­
quired in surveying th e stocks eligible
for th e Board’s List. Further, an anal­
ysis of available price information in­
dicates that NASDAQ is th e m ost con­
venient and com plete source of bid
and offer data for more actively
traded OTC stocks in addition to sup­
plying other needed data which are
unavailable from th e “pink sheets.”
The proposed amendments will permit
th e Board to use survey data from
NASDAQ only.
Accordingly, pursuant to sections 7
and 23 of th e Securities Exchange Act
of 1934, as amended (15 U.S.C. 78 g
and w) th e Board proposes to amend
12 CFR Parts 207, 220, and 221 as fol­
lows:
PART 2 0 7 — SECURITIES CREDIT BY
PERSONS OTHER THAN BANKS,
BROKERS, OR DEALERS

1.
Section 207.5(d)(2) and 207.5(e)(2)
of Part 207, Securities Credit by Per­
sons other than Banks, Brokers or
Dealers, would be amended as follows:
§ 207.5 Supplement.
•

«

•

•

•

(d) Requirements for inclusion on
List of OTC margin stock. * • •
(2) Four or more dealers stand will­
ing to, and do in fact, make a market
in such stock and regularly submit
bona fide bids and offers to an auto­
mated quotations system for their own
accounts, or the stock is registered on
a securities exchange that is exempted
by the Securities and Exchange Com­
mission from registration as a national
securities exchange pursuant to sec­
tion 5 of th e Securities Exchange Act
of 1934 (15 U.S.C. 78e).
•

*

»

•

•

(e) Requirements for continued in­
clusion on List of OTC margin stock.
•

*

*

«

•

(2) Three or more dealers stand will­
ing to, and do in fact, make a market
in such stock and regularly submit
bona fide bids and offers to an auto­
mated quotations system for their own
accounts, or the stock is registered bn
a securities exchange that is exempted
by the Securities and Exchange Com­
mission from registration as a national
securities exchange pursuant to sec
tion 5 of th e Securities Exchange Act
of 1934 (15 U.S.C. 78e).
PART 220— CREDIT BY BROKERS AND
DEALERS

2.
Section 220.8(h)(2) and 220.8(i)(2)
of Part 220, Credit by Brokers and

Dealers, would be amended as set
forth below:

mated quotations system for their own
accounts, or th e stock is registered on
a securities exchange that is exempted
§ 220.8 Supplement.
by the Securities and Exchange Com­
mission from registration as a national
securities exchange pursuant to sec­
(h) Requirements for inclusion on tion 5 of the Securities Exchange Act
List of OTC margin stock. * * *
of 1934 (15 U.S.C. 78e).
(2) Four or more dealers stand will­ To aid in consideration of this
ing to, and do in fact, make a market m atter by th e Board, interested per­
in such stock and regularly submit sons are invited to submit relevant
bona fide bids and offers to an auto­ data, views, comments, or arguments.
mated quotations system for their own All material should Include the docket
accounts, or th e stock is registered on
R-0147.
a securities exchange that is exempted numberavailable Such material will be
for inspection and
by th e Securities and Exchange Com­ made
copying upon request, except as pro­
mission from registration as a national
securities exchange pursuant to sec­ vided in § 261.6(a) of th e Board’s Rules
tion 5 of th e Securities Exchange Act Regarding Availability of Information
(12 CFR 261.6(a)).
of 1934 (IS U.S.C. 78e).
By order of th e Board of Governors,
March 13,1978.
(1) Requirements for continued in­
T h e o d o r e E. A l l i s o n ,
clusion on List of OTC margin stock.

Secretary of the Board.

m m m

(2) Three or more dealers stand will­
ing to, and do in fact, make a market
in such stock and regularly submit
bona fide bids and offers to an auto­
mated quotations system for their own
accounts, or th e stock is registered on
a securities exchange that is exempted
by the Securities and Exchange Com­
mission from registration as a national
securities exchange pursuant to sec­
tion 5 of the Securities Exchange Act
of 1934 (15 U.S.C. 78e).
PART 221— CREDIT BY BANKS FOR
THE PURPOSE OF PURCHASING OR
CARRYING MARGIN STOCKS

3.
Section 221.4(d)(2) and 221.4(e)(2)
of Part 221, Credit by Banks for the
Purpose of Purchasing or Carrying
Margin Stocks, would be amended as
follows:
§ 221.4

Supplement.

(d)
Requirements for inclusion on
List of OTC margin stock. * * *
(2) Four or more dealers stand will­
ing to, and do in fact, make a market
in such stock and regularly submit
bona fide bids and offers to an auto­
mated quotations system for their own
accounts, or the stock is registered on
a securities exchange that is exempted
by the Securities and Exchange Com­
mission from registration as a national
securities exchange pursuant to sec­
tion 5 of the Securities Exchange Act
of 1934 (15 U.S.C. 78e).
(e)
Requirements for continued in­
clusion on List of OTC margin stock.
mmm
(2) Three or more dealers stand will­
ing to, and do in fact, make a market
in such stock and regularly submit
bona fide bids and offers to an auto-

[ F R D oc. 7 8 -7 204 F ile d 3 -1 4 -7 8 ; 5:10 p m ]

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