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F ederal Reserve b a n k o f Dallas
DALLAS, TE X A S

75222

Circular No. 72-258
November 13, 1972

INTERPRETATIONS OF REGULATION U
(Computation of Time Periods for Acquiring
and Holding Blocks of Stock by Block Positioners)

To All Banks, Broker/Dealers, Regulation G-Registrants
and Others Concerned, in the Eleventh Federal Reserve District:

The Board of Governors of the Federal Reserve System
issued, on November 3 , 1972, an interpretation concerning the com­
putation of time periods for acquiring and. holding blocks of
stock by block positioners under the provisions of Regulation U.
The interpretation is printed, on the reverse.

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)

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

CREDIT BY BANKS FOR THE PURPOSE OF PURCHASING
OR CARRYING MARGIN STOCKS
INTERPRETATION OF REGULATION U
SEC T IO N 221.121 C O M P U T A T IO N O F T IM E
P E R IO D S F O R A C Q U IR IN G A N D H O L D ­
IN G BLOCKS O F STO CK BY
BLO CK PO SIT IO N E R S.
(a) T he Board recently considered two ques­
tions in connection with section 221.3 (z) (2 ) and
(3 ) of Regulation U providing for bank credit to
block positioners w hich is exem pt from the norm al
m argin requirem ents as prescribed from time to
tim e in th a t regulation.
(b) The first question pertained to the period
of tim e in w hich a block positioner, in order to
qualify for the exemption, m ust position a block
of stock w hen such positioning results from several
transactions at approxim ately the same tim e from
a single source, as set forth in section 221.3 (z)
(2 ) (ii).
(c) T he Board is of the view that the aggregate
of several transactions from a single source w ould
ordinarily be carried out w ithin a tim e span of one
half ho u r in order for such aggregate to be con­
sidered one block of stock eligible for exempt

credit. In extraordinary circum stances, however,
the block positioner could consult the Reserve
Bank in whose district its office is situated as to
w hether stock positioned over a slightly longer
period constitutes a single block. In such a case
the block positioner should, of course, disclose all
relevant circum stances to the Reserve Bank.
(d ) T he second question related to the com pu­
tation of the period of tw enty business days, speci­
fied in section 2 2 1 .3 (z )( 3 ), in w hich exempt
credit may rem ain outstanding for positioning a
block of stock.
(e) The Board is of the view that the com puta­
tion of such 20-day period shall com m ence on the
business day following the date of trade.

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