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F ederal R eserve Ban k o f D allas
DALLAS, TE X A S

75222

Circular No. 72-126
June 22, 1972

PROPOSED AMENDMENT TO REGULATION T

To All Banks, Broker/Dealers, and Other Concerned in the Eleventh
Federal Reserve District:

The Board of Governors of the Federal Reserve System
proposes to amend Regulation T, "Credit by Brokers and Dealers",
with respect to credit for the combined acquisition of mutual
fund shares and insurance. Printed on the following pages is
the notice regarding the proposal.
Comments on the proposal should be submitted in writing
to the Secretary, Board of Governors of the Federal Reserve
System, Washington, D. C. 20551? to be received not later than
July 7, 1972.

Yours very truly,
P. E. Coldwell,
President

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 PART 220]
[REG. T]
CREDIT BY BROKERS AND DEALERS
Credit for the Combined Acquisition
of Mutual Fund Shares and Insurance
The Board of Governors proposes to amend Part 220 (Regu­
lation T) by eliminating from § 220.4(k) the requirement that, in
order to be eligible for the provisions of that section, a creditor
must be the issuer, or a subsidiary or affiliate of the issuer, of
programs which combine the acquisition of mutual fund shares and
insurance.

§ 220.4(k) would also be amended to permit creditors who

arrange credit for the acquisition of mutual fund shares and insurance
to sell mutual fund shares without insurance under the provisions of
§ 220.4(c)

- Special Cash Account - of Regulation T.
The designation of § 220.4(k) would be changed to "Special

insurance premium funding account” .
The text of the proposed amendment reads as follows:
§ 220.4 - SPECIAL ACCOUNTS
*
(k)

*

*

*

*

Special insurance premium funding account.

In a special

insurance premium funding account a creditor may arrange for the
extension or maintenance of credit, not in excess of the premiums on
the insurance policy (plus any applicable interest), on a security
issued by an investment company registered pursuant to section 8

- 2 -

of the Investment Company Act of 1940 (15 U.S.C. 80a-8) that serves
as collateral under a plan, program, or investment contract registered
with the Securities and Exchange Commission under the Securities Act
of 1933 (15 U.S.C.

77), that provides for the acquisition both of a

security issued by such investment company and of insurance:

Pro vided ,

That such credit is extended or maintained by a lender subject to
Part 207 of this Chapter (Regulation G) or a bank subject to Part 221
of this Chapter (Regulation U).

A creditor arranging credit in a
.

special insurance premium funding account shall not extend, arrange,
or maintain credit in the general account or any other special account
in §§ 220.3 and 220.4 of this part, except for transactions involving
the purchase of shares, in the special cash account described in
§ 220.4(c) , in investment companies which are so registered.

To aid in the consideration by the Board of these proposed
amendments, interested persons are invited to submit relevant data,
views, or arguments in writing to the Secretary, Board of Governors
of the Federal Reserve System, Washington, D. C. 20551, to be
received not later than July 7, 1972.

Such material will be made

available for inspection and copying upon request, except as provided
in § 261.1(a) of the Bo a r d ’s Rules Regarding Availability of Information.
By order of the Board of Governors, June 2, 1972.
(Signed)

Michael A. Greenspan

Michael A. Greenspan
Assistant Secretary of the Board.
(SEAL)

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