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F ederal r eser ve b a n k o f D allas
DALLAS, TE X A S

75222

Circular No. 72-273
November 28, 1972

NEW MARGIN REQUIREMENTS
(Regulations G, T, and U)

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

The Board of Governors of the Federal Reserve System
increased the initial margin requirements for purchasing or
carrying stocks from 55 percent to 65 percent, effective
November 2 b , 1972. At the same time, the Board increased the
required deposit on short sales from 55 percent to 65 percent,
also effective November 2 b . No change was made in the 50 per­
cent margin requirements for purchasing or carrying convertible
bonds or in the 70 percent retention requirement applicable to
undermargined accounts. Printed copies of the new supplements
to Regulations G, T, and. U are enclosed.

Yours very truly,
P. E. Coldwell,
President

Enclosures

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

SUPPLEMENT TO REGULATION G
Effective November 2 4 ,1 9 7 2
S E C T IO N 207.5 — S U P P L E M E N T
(a) Maximum loan value of margin securities.
F o r the purpose of § 207.1, the m axim um loan
value of any m argin security, except convertible
securities subect to § 2 0 7 .1 (d ), shall be 35 per
cent of its current m arket value, as determ ined by
any reasonable method.
(b) Maximum loan value of convertible debt
securities subject to § 207.1(d). F o r the purpose of
§ 207.1, the m axim um loan value of any security
against w hich credit is extended pursuant to
§ 20 7 .1 (d ) shall be 50 per cent of its current m ar­
ket value, as determ ined by any reasonable method.
(c) Retention requirement. F o r the purpose of
§ 207.1, in the case of a loan w hich w ould exceed
the m axim um loan value of the collateral follow­
ing a w ithdraw al of collateral, the “retention re­
quirem ent” of a m argin security and of a security
against w hich credit is extended pursuant to
§ 2 0 7 .1 (d ) shall be 70 per cent of its cu rren t m ar­
ket value, as determ ined by any reasonable method.
(d) Requirements for inclusion on list of OTC
margin stock. E xcept as provided in subparagraph
(4) of § 207.2(f), such stock shall m eet the require­
m ents that:
(1) T he stock is subject to registration under
§ 12(g) (1) of the Securities Exchange A ct of 1934
(15 U.S.C. 78/(g) ( 1 ) ) , or if issued by an insurance
com pany subject to § 12(g) (2 ) (G ) (15 U.S.C.
78 /(g) (2) ( G ) ) the issuer had at least $1 million
of capital and surplus,
(2 ) Five or m ore dealers stand willing to, and
do in fact, m ake a m arket in such stock including
m aking regularly published b o n a f i d e bids and
offers for such stock for their ow n accounts, or
the stock is registered on a securities exchange
that is exem pted by the Securities and Exchange
Com mission from registration as a national securi­
ties exchange pursuant to § 5 of the Securities E x­
change A ct of 1934 (15 U.S.C. 7 8e),

(3 ) T here are 1,500 or m ore holders of record
of the stock who are not officers, directors, or
beneficial owners of 10 per cent o r m ore of the
stock,
(4) T he issuer is organized un der the laws of
the U nited States or a State9 and it, or a predeces­
sor in interest, has been in existence for at least
3 years,
(5) T he stock has been publicly traded fo r at
least 6 months, and
(6) Daily quotations for both bid and asked
prices fo r the stock are continuously available to
the general public;
and shall m eet 3 of the 4 additional requirem ents
that:
(7) T here are 500,000 o r m ore shares of such
stock outstanding in addition to shares held bene­
ficially by officers, directors, or beneficial owners
of m ore than 10 per cent of the stock,
(8) T he shares described in subparagraph (7 )
of this paragraph have a m arket value in the aggre­
gate of at least $10 million,
(9 ) T he m inim um average bid price of such
stock, as determ ined by the B oard in the latest
month, is at least $10 per share, and
(10 ) T he issuer had at least $5 million of
capital, surplus, and undivided profits.
(e)
Requirements for continued inclusion on
list of OTC margin stocks.
(1)
The stock continues to be subject to regis­
tration under § 12(g) (1 ) of the Securities Ex­
change act of 1934 (15 U.S.C. 7 8 /(g) ( 1 ) ) , or
if issued by an insurance com pany such issuer con­
tinues to be subject to § 12(g) (2 ) (G ) (15

9 As defined in 15 U.S.C. 78c(a) (16).
(over)

U.S.C. 78/(g) (2) ( G ) ) and has at least $1 mil­
lion of capital and surplus.

the general public; and shall m eet 3 of the 4 addi­
tional requirem ents that:

(2) F o u r or m ore dealers stand willing to, and
do in fact, m ake a m arket in such stock including
m aking regularly published b o n a f i d e bids and of­
fers fo r such stock for their own accounts, o r the
stock is registered on a securities exchange that is
exem pted by the Securities and Exchange C om ­
mission from registration as a national securities
exchange pursuant to § 5 of the Securities Ex­
change A ct of 1934 (15 U.S.C. 7 8e),

(6) 400,000 or m ore shares
m ain outstanding in addition to
ficially by officers, directors, or
of m ore than 10 per cent of the

(3) T here continue to be 1,000 o r m ore holders
of record of the stock who are not officers, direc­
tors, or beneficial owners of 10 p er cent o r m ore
of the stock,

(8 ) T he m inim um average bid price of such
stock, as determ ined by the Board, is at least $5
p er share, and

(4) T he issuer continues to be a U . S. corpo­
ration,
(5 ) D aily quotations for both bid and asked
prices fo r the stock are continuously available to

of such stock re­
shares held bene­
beneficial owners
stock,

(7) T he shares described in subparagraph (6)
of this paragraph continue to have a m arket value
in the aggregate of at least $5 million,

(9 ) The issuer continues to have at least $2.5
million of capital, surplus, and undivided profits.
(f)
M inim um eq u ity ra tio . T h e m in im u m
equity ratio of a credit subject to § 207.1 is 40
percent.

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

SUPPLEMENT TO REGULATION T
Effective Novem ber 24, 1972
SEC T IO N 220.8 — S U P P L E M E N T
(a) Maximum loan value for general accounts.
T he m axim um loan value of securities in a general
account subject to § 220.3 shall be:
(1) of a registered non-equity security held in
the account on M arch 11, 1968, and continuously
thereafter, and of a m argin equity security (except
as provided in § 2 20.3(c) and paragraphs (b) and
(c) of this section), 35 per cent of the current
m arket value of such securities.
(2) of an exem pted security held in the account
on M arch 11, 1968, and continuously thereafter,
the m axim um loan value of the security as deter­
m ined by the creditor in good faith.
(b ) Maximum loan value for a special bond
account. T he m axim um loan value of an exempted
security and of a registered non-equity security
pursuant to § 220.4 (i) shall be the m axim um loan
value of the security as determ ined by the creditor
in good faith.
(c) Maximum loan value for special convertible
debt security account. T he m axim um loan value
of a m argin security eligible for a special convert­
ible security account pursuant to § 22 0.4(j) shall
be 50 per cent of the current m arket value of the
security.
(d ) Margin required for short sales. The am ount
to be included in the adjusted debit balance of a
general account, pursu ant to § 2 2 0.3 (d) ( 3 ), as
m argin required for short sales of securities (other
than exem pted securities) shall be 65 per cent of
the current m arket value of each security.

(2) In the case of a special bond account sub­
ject to § 2 2 0 .4 (i), the retention requirem ent of an
exem pted security and of a registered nonequity
security shall be equal to the m axim um loan value
of the security.
(3) In the case of a special convertible security
account subject to § 22 0 .4 (j) w hich w ould have an
excess of the adjusted debit balance of the account
over the m axim um loan value of the securities in
the account following a w ithdraw al of cash or
securities from the account, the retention require­
m ent of a security having loan value in the account
shall be 70 per cent of the current m arket value
of the security.
(4) F o r the purpose of effecting a transfer from
a general account to a special convertible security
account subject to § 2 2 0 .4 (j) , the retention require­
m ent of a security described in § 2 2 0 .4 (j), shall be
70 p er cent of its current m arket value.
(f) Security having no loan value in general
account. N o securities other than an exempted
security or registered non-equity security held in
the account on M arch 11, 1968, and continuously
thereafter, and a m argin security, shall have any
loan value in a general account except th at a m ar­
gin security eligible for the special convertible
security account pursuant to § 220.4 (j) shall have
loan value only if held in the account on M arch
11, 1968, and continuously thereafter.
(g) Account subject to section 8(g). F o r p u r­
poses of the com putation described in § 220 .3(b)
(1 ) (ii),

(1) T he m axim um loan value of a registered
non-equity security held in the account on M arch
(e) Retention requirement. In the case of an
11, 1968, and continuously thereafter, and of a
account which w ould have an excess of the adjusted
margin equity security shall be 60 per cent of
debit balance of the account over the m axim um
the current m arket value of such security, and
loan value of the securities in the account follow­
the m axim um loan value of an exem pted security
ing a w ithdraw al of cash or securities from the
held in the account on M arch 11, 1968, and con­
account, pursuant to § 2 2 0.3 (b) ( 2 ) :
tinuously thereafter shall be the m axim um loan
value of the security as determ ined by th e creditor
(1 )
T he “retention requirem ent” of an exem pted
in good faith.
security held in the general account on M arch 11,
1968, and continuously thereafter, shall be equal
(2) T he am ount to be included in th e adjusted
to its m axim um loan value as determ ined by the
debit balance of the account pursuant to § 220.3
creditor in good faith, and the “retention require­
( d ) ( 3 ) as m argin required for short sales of se­
m ent” of a registered non-equity security held in
curities (other than exem pted securities) shall be
such account on M arch 11, 1968, and continuously
40 per cent of the current m arket value of each
thereafter, and of a m argin security, shall be 70
security.
per cent of the current m arket value of the security.
(ov er )

(h )
Requirements for inclusion on list of OTC stock, as determ ined by the Board in the latest
month, is at least $10 per share, and
margin stock. Except as provided in subparagraph
(4) of § 2 2 0 .2 (e ), O TC m argin stock shall meet
(10 )
The issuer had at least $5 million of capital,
the requirem ents that:
surplus, and undivided profits.
(1 ) T he stock is subject to registration under
(i)
Requirements for continued inclusion on
§ 12(g) (1 ) of the Securities Exchange A ct of 1934
list of OTC margin stock.
(15 U.S.C. 78/(g) ( 1 ), or if issued by an insur­
ance com pany subject to § 12(g) (2 ) (G ) (15
(1) T he stock continues to be subject to regis­
U.S.C. 78/(g) (2) ( G ) ) , the issuer had at least $1
tration und er § 12(g) (1) of the Securities Ex­
million of capital and surplus.
change A ct of 1934 (15 U.S.C. 7 8 /(g) ( 1 ) ) , or
if issued by an insurance com pany such issuer
(2) Five or m ore dealers stand willing to, and
continues to be subject to § 12(g) (2) (G) (15
do in fact, make a m arket in such stock including
U.S.C. 78 /(g) (2 ) ( G ) ) and has at least $1 mil­
making regular published b o n a f i d e bids and
lion of capital and surplus.
offers for such stock for their own accounts, or the
(2) F o u r or m ore dealers stand willing to, and
stock is registered on a securities exchange that is
do in fact, m ake a m arket in such stock including
exem pted by the Securities and Exchange C om ­
making regularly published b o n a f i d e bids and of­
mission from registration as a national securities
exchange pursuant to § 5 of the A ct (15 U.S.C.
fers for such stock for their own accounts, or the
78e),
stock is registered on a securities exchange that
is expected by the Securities and Exchange Com ­
(3) T here are 1,500 or m ore holders of record
mission from registration as a national securities
of the stock w ho are not officers, directors, or
exchange pursuant to § 5 of the Securities Ex­
beneficial owners of 10 per cent or m ore of the
change A ct of 1934 (15 U.S.C. 7 8e),
stock,
(3 ) There continue to be 1,000 or m ore holders
(4) T he issuer is organized under the laws of
of record of the stock who are not officers, direc­
the U nited States or a State6 and it, or a predeces­
tors, or beneficial owners of 10 per cent or more
sor in interest, has been in existence fo r at least
of the stock,
3 years,
(4 ) T he issuer continues to be a U.S. C orpo­
(5) The stock has been publicly traded for at
ration,
least 6 m onths, and
( 5 ), Daily quotations fo r both bid and asked
(6) Daily quotations for both bid and asked
prices for the stock are continuously available to
prices for the stocks are continuously available to
the general public; and shall meet 3 of th e 4
the general public;
additional requirem ents that:
and shall m eet 3 of the 4 additional requirem ents
that:
(6 ) 400,000 or m ore shares of such stock re­
main outstanding in addition to shares held bene­
(7) T here are 500,000 or m ore shares of such
ficially by officers, directors, or beneficial owners
stock outstanding in addition to shares held bene­
of m ore than 10 per cent of the stock,
ficially by officers, directors, or beneficial owners
(7 ) T he shares described in subparagraph (6)
of m ore than 10 per cent of the stock,
of this paragraph continue to have a m arket value
(8) T he shares described in subparagraph (7)
in the aggregate of at least $5 million.
of this paragraph have a m arket value in the aggre­
(8) T he m inim um average bid price of such
gate of at least $10 million,
stock, as determ ined by the Board, is at least $5
(9) T he m inim um average bid price of such
per share, and
6As defined in 15 U.S.C. 78c(a) (16).

(9)
T he issuer continues to have at least $2.5
million of capital, surplus, and undivided profits.

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

SUPPLEMENT TO REGULATION U
Effective November 24, 1972
SEC T IO N 221.4 — S U P P L E M E N T
(a) M axim um loan value of stocks. F o r the
purpose of § 221.1, the m axim um loan value of
any stock, w hether or not registered on a national
securities exchange, shall be 35 per cent of its
current m arket value, as determ ined by any rea­
sonable method.
(b) Maximum loan value of convertible debt
securities subject to § 221.3(t). F o r the purpose
of § 221.3 ( t) , the m axim um loan value of any se­
curity against which credit is extended pursuant
to § 221.3 (t) shall be 50 per cent of its current
m arket value, as determ ined by any reasonable
m ethod.
(c) Retention requirement. F o r the purpose of
§ 221.1, in the case of a credit w hich w ould exceed
the m axim um loan value of the collateral follow­
ing a w ithdraw al of collateral, the “retention re­
quirem ent” of a stock, w hether o r not registered
on a national securities exchange, and of a con­
vertible debt security subject to § 221.3 ( t) , shall
be 70 per cent of its curren t m arket value, as de­
term ined by any reasonable method.
(d ) Requirements for inclusion on list of O TC
margin stock. E xcept as provided in subparagraph
(4) of § 221.3(d), O T C m argin stock shall m eet
the requirem ents that:
(1) T h e stock is subject to registration under
§ 12(g) (1 ) of th e Securities Exchange A ct of
1934 (15 U.S.C. 7 8 /(g ) ( 1 ) ) , or if issued by an
insurance com pany subject to § 12(g) (2 ) (G )
(15 U.S.C. 7 8 1 ( g ) ( 2 ) ( G ) ) the issuer had at least
$1 million of capital and surplus,
(2 ) F ive or m ore dealers stand willing to, and
do in fact, m ake a m arket in such stock including
m aking regularly published b o n a f i d e bids and of­
fers for such stock fo r their own accounts, or the
stock is registered on a securities exchange th at is
exem pted by the Securities and Exchange C om ­
mission from registration as a national securities
exchange pursuant to § 5 of the A ct (15 U.S.C.
7 8e),
(3 ) T here are 1,500 or m ore holders of record
of the stock w ho are not officers, directors, or

beneficial owners of 10 per cent or m ore of the
stock,
(4) The issuer is organized under the laws of
the U nited States or a State12 and it, or a predeces­
sor in interest, has been in existence fo r at least
3 years,
(5) T he stock has been publicly traded for at
least 6 months, and
(6 ) Daily quotations for both bid and asked
prices for the stock are continuously available to
the general public;
and shall meet 3 of the 4 additional requirem ents
that:
(7) T here are 500,000 or m ore shares of such
stock outstanding in addition to shares held bene­
ficially by officers, directors, o r beneficial owners
of m ore than 10 per cent of the stock.
(8) T he shares described in subparagraph (7 )
of this paragraph have a m arket value in the
aggregate of at least $10 million.
(9) T he m inim um average bid price of such
stock, as determ ined by the Board in the latest
m onth, is at least $10 per share, and
(10) The issuer had at least $5 million of capi­
tal, surplus, and undivided profits.

(e)
Requirements for continued inclusion on list
of OTC margin stock.
(1 ) T he stock continues to be subject to regis­
tration und er § 12(g) (1 ) of the Securities E x­
change A ct of 1934 (15 U.S.C. 78/(g ) ( 1 ) ) , or
if issued by an insurance com pany such issuer con­
tinues to be subject to § 1 2(g) (2 ) (G ) (15
U.S.C. 1 8 1 ( g ) ( 2 ) ( G ) ) and has at least $1 mil­
lion of capital and surplus.
(2 ) F o u r or m ore dealers stand willing to, and
do in fact, m ake a m arket in such stock including

i2As defined in 15 U.S.C. 78c(a) (16).
(O V E R )

m aking regularly published b o n a f i d e bids and of­
fers for such stock for their own accounts, or the
stock is registered on a securities exchange th at is
exem pted by the Securities and Exchange C om ­
mission from registration as a national securities
exchange pursuant to § 5 of the Securities E x­
change A ct of 1934 (15 U.S.C. 7 8 e),
(3) T here continue to be 1,000 or m ore holders
of record of the stock w ho are not officers, direc­
tors, or beneficial owners of 10 per cent or m ore
of the stock,
(4 ) The issuer continues to be a U.S. corpora­
tion,
(5) D aily quotations for both bid and asked
prices for the stock are continuously available to
the general public; and shall m eet 3 of the 4 addi­
tional requirem ents that:

(6) 400,000 o r m ore shares of such stock re­
main outstanding in addition to shares held bene­
ficially by officers, directors, or beneficial owners
of m ore than 10 per cent of the stock,
(7 ) T he shares described in subparagraph (6)
of this paragraph continue to have a m arket value
in the aggregate of at least $5 million,
(8 ) The m inim um average bid price of such
stock, as determ ined by the Board, is at least $5
per share, and
(9 ) T he issuer continues to have at least $2.5
million of capital, surplus, and undivided profits.
(f)
Minimum equity ratio. T he m inim um
equity ratio of a credit subject to § 221.1 is 40
percent.

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