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federal reserve bank of

DALLAS, T E X A S

D allas

75222
Circular No. 82-14
February 3, 1982

REGULATIONS G, T AND U
S e c u r ities Credit Transactions

TO ALL MEMBER BANKS,
OTHER CREDITORS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board o f G overnors o f the Federal R e se r v e System has adopted
am en dm ents to its R egulations G , T, and U. The am en dm ents are designed to
sim plify and c la r ify the se c u r itie s margin requirem ent rules.
Enclosed are c o p ies o f the Board's press r e le a se dated January 18,
1982, and th e m aterial as subm itted for publication in the Federal R egister
which more fully explain the Board's action .
Q uestions regarding the R egulations should be d irected to this
Bank's Legal D ep artm en t, Ext. 6171.
Additional c o p ies o f this circular will be furnished upon request to
the D ep artm en t o f Com m unications, Financial and C om m unity A ffairs, Ext.
6289.
S in cerely yours,

William H. W allace
First Vice President
Enclosure

Banks and others are encouraged to use the following incoming W AT S numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (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)

FEDERALRESERVEpressrelease
January 18, i‘82
9

For immediate release

The Federal Reserve Board today announced adoption of several amendments
to simplify and clarify its securities margin requirement rules.
The Board's action was part of a general overhaul of its margin regulations
aimed at bringing them up to date with current circumstances in the securities
markets, reducing regulatory burden, and simplifying and clarifying the language.
This is part of the Board’s Regulatory Improvement Program under which the Board is
reviewing all of its regulations with similar objectives.
The Board adopted amendments to Regulation G (Securities credit
extended by persons other than banks, brokers or dealers), T (Securities credit
extended by brokers and dealers) and U (Credit extended by banks for the purpose of
purchasing or carrying margin stocks), after considering comment received on proposed
revisions of the margin regulations published in June and July.
The Board will not complete the rewriting of its margin regulations for
some time, but adopted amendments at this time— in the interests of lightening
regulatory burdens and providing flexibility along the lines proposed by the Board—
where comments disclosed no substantial disagreemnt.

The effects of the amendments

are:
— Regulation G : Permit lenders subject to this regulation (chiefly
insurance companies and credit unions) to extend the scope of their lending, give
them more flexibility with respect to collateral, and clarify the definition of
indirect security for loans.
— Regulation T :

Relax restrictions on the arranging of credit by brokers

and dealers to permit investment banking services that may otherwise be prohibited.
Regulation U ;

Revise the applicability of the regulation so as to

exempt bank credit not secured by

margin equity securities, and clarify the definition

of indirect security credit, as in Regulation G.

- 2

— Regulations G, T & U:

-

Remove some restrictions on transactions in

highly leveraged margin accounts, thereby giving these account holders greater
flexibility in reallocating portfolios.

The amendments are effective February 15, with exception of a provision
in Regulation U concerning collateral, which will be effective March 31.
The Board's notice, detailing changes in its margin requirements, is
attached.

Attachment

FEDERAL RESERVE SYSTEM

Regulations G, T and U
[12 CFR 207, 220 and 221]
[Docket No. R-0362]
SECURITIES CREDIT TRANSACTIONS
Revision and S i m p li fi ca ti o n of th e Margin Regulations
AGENCY:

Board of Governors of the Federal Reserve System.

ACTION:

Final Rule.

SU M RY Comments have been received on a major r ev is io n of the Board's margin
MA :
rules published in th e Federal Re gister on June 24, 1981 and July 21, 1981 (46
F.R. 32592 and 46 F.R. 37516). Although the complete rewriting of the regula­
t i o n s in si m p l i f ie d language cannot be completed for some months, th e Board
has decided to amend the e x i s ti n g rul es a t t h i s time to grant r e l i e f and f l e x i ­
b i l i t y in areas where th e comments disc losed no s u b s ta n ti a l disagreement with
the Board's proposals and the amendments can be adopted without su bs t an t i al
modification of the wording of th e e x i s t i n g r e g u l a t i o n s . The Board i s t h e r e f o r e
(1) amending Regulation G to permit G-lenders to extend both regulated and non­
regulated c r e d i t to the same borrower and to permit mixed c o l l a t e r a l loans.
These changes p a r a l l e l e x is ti n g rul es in Regulation U. In addit io n the d e f i n i ­
t i o n of " i n d i r e c t l y secured" in Regulation G will be changed to provide a
narrower and more e x p l i c i t d e f i n i t i o n than the one in the present r u l e ; (2)
amending Regulation T to permit brokers and deal er s to arrange c r e d i t s t h a t
they cannot p re se n t l y extend when those arrangements are p ar t of investment
banking f u nct io ns; (3) amending Regulation U to exclude from q u a n t i t a t i v e
l i m i t a t i o n bank c r e d i t which i s not secured by margin stock and to define the
term " i n d i r e c t l y secured" in a more o b j e c t i v e manner than in the present regu­
l a t i o n . This d e f i n i t i o n w il l be the same as t h a t in Regulation G; (4) removing
the equity building devices in Regulations G, T and U.
EFFECTIVE DATE: February 15, 1982 except f or the amendment to Regulation U
t o exempt from q u a n t i t a t i v e l i m i t a t i o n bank c r e d i t which i s not secured by
margin stock. The e f f e c t i v e date of t h a t amendment i s March 31, 1982.
FOR FURTHER INFORM
ATION CONTACT: Laura Homer, S e c u r i t i e s Credit O f fi c e r ,
Division of Banking Supervision and Regulation, Board of Governors of the
Federal Reserve System, Washington, D.C. 20551 (202) 452-2781 or Mindy Silverman
A s s i s t a n t Counsel, Federal Reserve Bank o f New York (212) 791-5032.
SUPPLEM
ENTAL INFORMATION:
I n d i r e c t s e c u r i t y in Regulations G and U. The Board i s amending Regu­
l a t i o n s G and U to narrow th e d e f i n i t i o n of " i n d i r e c t l y secured." The present

- 2 -

d e f i n i t i o n has caused undue regulatory burden since i t i s premised on a subjec­
t i v e standard t h a t i s d i f f i c u l t to i n t e r p r e t and administer. I t i s expected
t h a t many of the i n t e r p r e t i v e problems t h a t now e x i s t under Regulation U will
be mooted as th e Board i s also adopting i t s proposal to el imin ate nonmargin
stock from th e c o l l a t e r a l t e s t in Regulation U. However, t o f u r t h e r reduce
the complexity of i n t e r p r e t a t i o n engendered by t h e " i n d i r e c t s e cu ri ty " con­
c e p t , t h e Board i s adopting a more ob je ct iv e d e f i n i t i o n under both r e g u la t i o n s .
In response to comments t h a t were received, two changes were made
in the d e f i n i t i o n t h a t was published f o r comment. F i r s t , subsection (1) was
revised to r e f e r t o "value of the a s s e t s . . . as determined by any reasonable
method" r a t h e r than " f a i r market value"; second, subsection (2) was amended to
make c l e a r t h a t cross d e f a u l t provisions r e l a t i n g to agreements between the
borrower and an u n a f f i l i a t e d lender would not be construed as cr ea ti ng i n d i r e c t
security.
R e s t r i c t i o n s on Regulation G-lenders. Lenders subject to Regula­
ti o n G are c u r r e n t l y proh ibite d from extending regulated loans and non-purpose
loans to the same borrower i f the non-purpose loan i s over $5,000 and both
loans are secured by the same margin s e c u r i t i e s . In a d d i t i o n , G-lenders are
pro hib ited from extending purpose c r e d i t on a s s e t s other than margin equity
s e c u r i t i e s con currently with or subsequent to an extension of purpose c r e d i t
secured by margin equity s e c u r i t i e s to the same borrower. The Board i s amend­
ing Regulation G to permit G-lenders to extend both non-purpose and purpose
c r e d i t secured by a s s e t s ot he r than margin equity s e c u r i t i e s concurrently with
the extension of regulated purpose c r e d i t . This will provide a regulatory
s t r u c t u r e comparable to t h a t p re sen tl y ap p l i c a b l e to banks under Regulation U.
The c o l l a t e r a l t e s t in Regulation U. The Board i s amending Regula­
t i o n U so t h a t only purpose loans secured by any margin stock will be subject
to th e margin r e s t r i c t i o n s and only loans secured by any margin stock will
re q u i re the execution of a Form U-l. The Form U-l has been changed to r e f l e c t
t h i s amendment and to reduce compliance burdens. A copy of the new form i s
being f i l e d with the Office of the Federal Reg ist er as p ar t of t h i s document
and copies of the new form will be a v a i l a b l e from the Federal Reserve Banks
p r i o r to the e f f e c t i v e date of the amendment.
The arranging of c r e d i t by a broker or d e a l e r in Regulation T. Sec­
t i o n 220.7(a) of Regulation T p r e s e n t l y r e s t r i c t s a broker or d e a le r in arrang­
ing c r e d i t . The Board i s amending the section to permit investment banking s e r ­
vices which involve the arranging of c r e d i t . In response to comments on the
o r ig in a l proposal, the language proposed in June, 1981 has been modified to
make i t c l e a r t h a t the types of permissible investment banking se rv ic es l i s t e d
are i l l u s t r a t i v e only and are not intended t o be t h e only permissible i n v e s t ­
ment banking se rv ic e s which may be undertaken.
Equity-building f e a t u r e s . The eq u i t y - b u i ld i n g fe a t u re s in Regula­
t i o n s G,T and U serve to force in ves tor s to r e t i r e indebtedness f a s t e r than
they might otherwise choose as th e p ri ce of e f f e c ti n g r e a l l o c a t i o n of a s s e t s
in t h e i r p o r t f o l i o s . The r e t e n t i o n requirement i s pr es en tl y 70 per cent while
t h e i n i t i a l margin i s 50 per cen t. W
hen a s e c u r i t y i s sold, 70 per cent of the
proceeds must be r e t a i n e d . The 20 per cent d i f f e r e n t i a l i s one equi ty -b ui ldi ng
f e a t u r e . The o th er e q u it y - b u i ld in g f e a t u r e p r o h i b i t s th e d a i l y n e t t i n g out of
a l l t r a n s a c t i o n s in highly-leveraged accounts. Because s a l e s and purchases on
a given day cannot be ne tt ed out before t h e margin i s computed, t h e margin
required f o r accounts with l e s s than 30 per cent equity i s p re se n tl y g r e a t e r

- 3 -

than for other accounts, thereby building up the customers' eq ui ty . The
substance of t h i s proposal will be put into e f f e c t by lowering th e re t en t i o n
requirement from 70 t o 50 per cent and by changing t h e minimum equ ity r a t i o
to zero. When the t h r e e re gu la ti o ns are completely r e w r i t t e n a t a l a t e r date
the needed language changes throughout the r eg ul ati ons will be made.
Accordingly, pursuant to §§7 and 23 of the S e c u r i t i e s Exchange Act
of 1934, as amended (15 U.S.C. §§ 78g, 78w) th e Board amends
Regulations G,
T and U (Parts 207,220 and 221, r e s p e c t i v e l y ) as follows:
A.

§ 207.1 of Regulation G i s amended by re placing paragraphs (h)

and ( i ) .
§ 207.1 - - GENERAL RULE
★

★

*

★

★

Existing paragraphs (h) and ( i ) are removed and the following new
paragraphs (h) and ( i ) are added:
(h)

Purpose

and nonpurpose c r e d i t extended t o the

same customer.

(1) The lender shall i d e n t i f y all th e c o l l a t e r a l used t o meet the
requirements of § 207.1(c) (the e n t i r e c r e d i t being considered a si n g l e c r e d i t
and c o l l a t e r a l being s i m i l a r l y considered) and shall not cancel th e i d e n t i f i ­
cation of any portion th er eo f except in circumstances t h a t would permit the
withdrawal of t h a t portion. Such i d e n t i f i c a t i o n may be made by any reasonable
method.
(2) For any c r e d i t
j e c t to § 207.1(c) th e lender
not so i d e n t i f i e d as would be
the indebtedness subje ct t o §
(i )

extended
shall in
required
207.1(c)

to the same customer t h a t i s not sub­
good f a i t h re qu ire as much c o l l a t e r a l
( i f any) i f th e lender held n e i t h e r
nor the i d e n t i f i e d c o l l a t e r a l .

Purpose c r e d i t secured by margin s e c u r i t i e s and ot her c o l l a t e r a l .

A lender may extend c r e d i t for the purpose of purchasing or carrying margin
s e c u r i t i e s secured by c o l l a t e r a l other than margin s e c u r i t i e s , and, in the
case of such c r e d i t , th e maximum loan value of th e c o l l a t e r a l shall be as
determined by th e lender in good f a i t h .
B.
as follows:

§ 207.2 of Regulation G is amended by re v i si n g § 207.2 ( i ) t o read

§ 207.2 — DEFINITIONS
*

*

*

*

*

(i)
I n d i r e c t l y secured. The term " i n d i r e c t l y secured" includes any
arrangement with the customer under which the customer's r i g h t or a b i l i t y to
s e l l , pledge, or otherwise dispose of margin s e c u r i t i e s owned by the customer i s

- 4 -

in any way r e s t r i c t e d as long as th e c r e d i t remains outstanding or under which
th e ex er ci se of such r i g h t i s or may be cause for a c c e l e r a ti o n of the maturity
of th e c r e d i t .
The foregoing sh a ll not apply:
(1) i f , following a p p l i c a t i o n of the proceeds of th e c r e d i t , not
more than 25 percent of t h e value of the a s s e t s subject to th e arrangement,
as determined by any reasonable method, a r e margin s e c u r i t i e s ;
(2) to a lending arrangement t h a t permits a c c e le r a t i o n of the
maturity of the c r e d i t as a r e s u l t of a d e f a u l t under, or the r e n e go ti at io n
of t h e terms of , another c r e d i t to th e same customer by another lender t h a t
i s not an a f f i l i a t e V of the G-lender; or
(3) i f t h e margin s e c u r i t i e s are held by th e lender only in the
capacity of cu s to di a n , d e p o s i ta r y , o r t r u s t e e , or under si m il a r circumstances,
and th e lender in good f a i t h has not r e l i e d upon such margin s e c u r i t i e s as
c o l l a t e r a l in the extension or maintenance of the p a r t i c u l a r c r e d i t .
*

*

*

C. § 2 0 7 . 5 — SUPPLEM
ENT i s amended by changing th e e x i s t i n g 70
per cent r e t e n t i o n requirement t o 50 per cent in § 207.5(c) and changing the
e x i s t i n g 30 per cent minimum equity r a t i o to zero per cent in § 207.5(f)~
D.
as fo llo w s:

§ 220.7 of Regulation T is amended by r ev isi ng § 220.7(a) to read

§ 220.7 — MISCELLANEOUS PROVISIONS
(a) Arranging for loans by o t h e r s . A c r e d i t o r may not arrange for
t h e extension or maintenance of c r e d i t to or f o r any customer by any person
upon terms and condit io ns other than those upon which the c r e d i t o r may himself
extend or maintain under th e provisions of t h i s P a r t , except t h a t t h i s l i m i ­
t a t i o n shall not apply t o c r e d i t arranged for a customer which does not vio­
l a t e P ar ts 207 and 221 of t h i s Chapter and r e s u l t s so l e ly from:
(1) investment banking s e r v i c e s , provided by th e c r e d i t o r to the
customer, in c l u d i n g , but not limi te d to underwritings, p r i v a t e placements,
and advice and other se rvi ces in connection with exchange o f f e r s , mergers
and a c q u i s i t i o n s , except f or underwritings t h a t involve th e public d i s t r i b u ­
t i o n of an equity se c u r i t y with in st al l m en t or ot her deferred payment provi­
s i on s ; or
(2) the sa l e of non-margin s e c u r i t i e s with i n s t a l l m e n t or ot her
de fe rre d payment provisions i f th e sa le i s exempted from the r e g i s t r a t i o n
requirements of th e S e c u r i t i e s Act of 1933 under sect io n 4(2) or section 4(6)
of th e Act (15 U.S.C. §§ 77(d)(2) and (6 )).
*

V

*

★

For t h i s purpose the term " a f f i l i a t e " sh a l l mean a person t h a t d i r e c t l y ,
or i n d i r e c t l y through one or more i n t e r m e d i a r i e s , c o n t r o l s , or i s con­
t r o l l e d by, o r i s under common control with th e lender.

- 5 -

E. § 220.8 — SUPPLEM
ENT i s amended by changing the e x i s t i n g 70 per
cent r e te n t i o n ~ e q u ir e m e n t to 50 per cent in § 220.8(e) (1), (3) and (4) and
by changing th e e x i s t i n g 70 per cent maximum loan value t o 100 per cent Tn
§ 220.8(g)(1) and the e x i s t i n g 30 per cent margin to zero per cent margin in
§ 220.8(g)(2).

F. §§ 221.1, 221.3 and 221.4 are amended by adding th e word
"margin" before the word "stock" in the following paragraphs:
§§ 2 2 1 . 1 ( a ) , (b) and ( c ) ; 221 .3 (a) , (m), (p ), (q ), ( r ) ( 2 ) , (s)
and ( t ) (4 ) ; 221.4(a) and (c) of Regulation U are amended by adding t h e word
"margin" before th e word "stock" in every place t h a t i t appears.
G.
as fo llo w s:

§ 221.3 of Regulation U i s amended by r ev is in g § 221.3(c) to read

SECTION 221.3 — M
ISCELLANEOUS PROVISIONS
*

*

*

*

*

(c) I n d i r e c t l y secured. The term " i n d i r e c t l y secured" includes any
arrangement with the customer under which th e customer's r i g h t or a b i l i t y to
s e l l , pledge, or otherwise dispose of margin stock owned by the customer is
in any way r e s t r i c t e d as long as the c r e d i t remains outstanding or under which
the exer cise of such r i g h t i s or may be cause f o r a c c e l e r a ti o n of th e maturity
of the c r e d i t .
The foregoing sh a ll not apply:
(1) i f , following a p p l i c a t i o n of the proceeds of the c r e d i t , not
more than 25 percent of t h e value of the a s s e t s subject to the arrangement,
as determined by any reasonable method, a r e margin stock;
(2) to a lending arrangement t h a t permits a c c e l e r a t i o n of the
maturity of the c r e d i t as a r e s u l t of a d e f a u l t under, or the r en eg ot ia ti on
of the terms of , another c r e d i t to the same customer by another lender t h a t
i s not an a f f i l i a t e V of the bank; o r
(3) i f the margin stock i s held by the bank only in th e capacity
of cust odia n, d e p o s i ta r y , or t r u s t e e , or under s i m i l a r circumstances, and the
bank in good f a i t h has not r e l i e d upon such margin stock as c o l l a t e r a l in
th e extension or maintenance of th e p a r t i c u l a r c r e d i t .
*

V

*

*

For t h i s purpose the term " a f f i l i a t e " sh a ll mean a bank holding company
of which th e bank i s a subs idia ry within t h e meaning of the Bank Holding
Company Act of 1956, as amended, o r any o t h e r subs idia ry o f such bank
holding company, or any other co r p o ra t i o n , business t r u s t , a s s o c i a t i o n or
o th er si m i l a r or ganization which i s an a f f i l i a t e as defined in sec ti on 2(b)
of the Banking Act of 1933 (12 U.S.C. 221a).

-

6 -

H.
§ 221.4 — SUPPLEM
ENT i s amended by changing the e x i s t i n g 70
per cent r e t e n t i o n requirement t o 50 per cent in § 221.4(c) and changing the
e x i s t i n g 30 per cent minimum equity r a t i o n t o zero per cent in § 2 21 . 4 (f X
REGULATORY FLEXIBILITY .ANALYSIS:
The Board of Governors of th e Federal Reserve System has received
comments on th e two s e t s of proposed changes to i t s margin r eg u l at i o ns t h a t
were published f o r comment in June and Jul y o f 1981. Because some of these
proposed changes received overwhelmingly favorable comments from the public
and can be put into e f f e c t without s u b s ta n ti a l modification in the wording of
the e x i s t i n g Regulations, implementation of t h es e changes need not await com­
p l e t i o n of the thorough rew rit e of the Regulations.
Although th e proposals se l e c t e d for immediate implementation req uir e
only minimal regul ato ry language changes, they o f f e r su bs ta nt i al regulatory
r e l i e f . As discussed in t h e " I n i t i a l Regulatory F l e x i b i l i t y Analysis" of the
June and J u l y Federal R e g is t e r n o t i c e s , th e s e changes will relax regulatory
treatment of individual and business borrowers, enhance the financing capa­
b i l i t i e s of small as well as l ar ge busine sse s, and increase the consistency
of treatment across all lenders.
By o rd er of the Board of Governors of the Federal Reserve System,
January 13, 1982.

(signed)

William W. Wiles

Secre tary of t h e Board
[SEAL]

This form i s required by law
(15 U.S.C. 78g and 78w; 12 CFR 221).

F.R. U-l
O.M.B. No. 7100-0115
Approval expires

BO RD Q GOVERNORS O THE FEDERAL RESERVE SYSTEM
A
F
F
STATEM
ENT O PURPOSE FOR A EXTENSION O CREDIT SECURED BY M
F
N
F
ARGIN STOCK

(Name of Bank)
(FEDERAL RESERVE FO U-l)
RM

Instructions:
(1)

This form must be completed when a bank extends c r e d i t secured d i r e c t l y
or i n d i r e c t l y , in whole or in p a r t , by any margin stock.

(2)

The term "margin stock" i s defined in Regulation U (12 CFR 221) and
in clu des , p r i n c i p a l l y : (1) stocks t h a t are r e g i s t e r e d on a national
s e c u r i t i e s exchange or t h a t are on the Federal Reserve Board's List
of O Margin Stocks; (2) debt s e c u r i t i e s (bonds) t h a t are co n v er t i b l e
TC
in to margin stocks; and (3) shares of mutual funds, unless 95 per cent
of the a s s e t s of the fund are continuously invested in U.S. government,
agency, S t a t e , or municipal o b l i g a t i o n s .

(3)

Please p r i n t or type ( i f space i s inadequate, at t a c h se parate s h e e t ) .

PART I

To be completed by borrower(s)

(1)

What i s the amount of th e c r e d i t being extended? .............................................

(2)

Will any pa rt of t h i s c r e d i t be used to purchase
or carry margin stock? ...................................................................................... yes no
I f the answer is "no," describe th e s p e c i f i c purpose of the c r e d i t .........

(pg.

1 continued)

I (we) have read t h i s form and c e r t i f y t h a t to th e best of my
(our) knowledge and b e l i e f th e information given i s t r u e , a c c u r a t e , and
complete, and t h a t t h e margin stock and any other s e c u r i t i e s c o l l a t e r a l i z i n g
t h i s c r e d i t ar e a u t h e n t i c , genuine, u n a l t e r e d , and not s t o l e n , forged, or
counterfeit.

SIGNED...............................................................................
(Borrower's sig n a tu r e)
(Date)

SIGNED.................................................................... .
(Borrower's s ig n a tu re )
(Date)

( Pr in t or type name)

(P r i n t or type name)

THIS FO SHOULD N BE SIGNED IN BLANK
RM
OT
A BO W W O FALSELY CERTIFIES THE PURPOSE O A CREDIT O THIS
RRO ER H
F
N
FO O OTHERW
RM R
ISE W
ILLFULLY O INTENTIONALLY EVADES THE PROVISIONS
R
O REGULATION U W
F
ILL ALSO VIOLATE FEDERAL RESERVE REGULATION X,
"RULES GOVERNING BORROW
ERS W O OBTAIN SECURITIES CREDIT"
H

(end of page 1)

PART II
To be completed by bank only i f t h e purpose of the c r e d i t i s t o
purchase or carry margin stock (Part 1(2) answered " y e s " ) . ~
(1) L i s t the margin stock securing t h i s c r e d i t ; do not include debt s e c u r i t i e s
c o n v e r ti b le i n t o margin stock. The maximum loan value of margin stock i s ................
per cent of i t s cu r re n t market value under the cur ren t Supplement to Regulation U.

No. of shares

Issue

Market p ri ce
per share

Date and source of
valuation
(See note below)

Total market
val ue per i s s a

(2) List the debt s e c u r i t i e s c o n v e r t i b l e i n t o margin stock securing t h i s
c r e d i t . The maximum loan value of such debt s e c u r i t i e s i s ............. per
cent of th e cu r re n t market value under th e cu rre nt Supplement t o Regulation U.
Principal
amount

(3)

Issue

Date and source of
valuation
(See note below)

Total market valu
per issue

List other c o l l a t e r a l including non-margin stock securing t h i s c r e d i t .
Describe b r i e f l y

Note:

Market pr ice

Market p ri ce

Date and source
of valua ti on
(See note below)

Good f a i t h
1oan value

Bank need not complete "Date and source of valuation" i f t h e market value was
obtained from r e g u l a rl y published information in a journal of general c i r c u l a t i o n .

(pg.

2 continued)

Part I I I To be signed by a bank o f f i c e r in a l l instances
I am a duly authorized o f f i c e r of the bank and understand t h a t t h i s
c r e d i t secured by mar-gin stock may be subject to th e c r e d i t r e s t r i c t i o n s
of
Regulation U. I have read t h i s form and any attachments, and I have accepted
the customer's statement in Part I in good f a i t h as required by Regulation U**,
and I c e r t i f y t h a t to the best of my knowledge and b e l i e f , a l l th e information
given i s t r u e , a c c u r a te , and complete. I also c e r t i f y t h a t i f any s e c u r i t i e s
t h a t d i r e c t l y secure the c r e d i t ar e not or will not be r e g i s t e r e d in the name
of th e borrower or i t s nominee, I have or will cause to have examined the
w r i t t e n consent of th e r e g i s t e r e d owner to pledge such s e c u r i t i e s . I
f u r t h e r c e r t i f y t h a t any s e c u r i t i e s t h a t have been or will be physically
de li ve re d to the bank in connection with t h i s c r e d i t have been or will be
examined, t h a t al l v ali d at i o n procedures required by bank policy and the
S e c u r i t i e s Exchange Act of 1934 (s ec ti on 1 7 ( f ) , as amended) have been or
will be performed, and t h a t I am s a t i s f i e d to the best of my knowledge and
b e l i e f t h a t such s e c u r i t i e s are genuine and not stol en or forged and t h e i r
faces have not been a l t e r e d .
Date..................................................... SIGNED........................................................................
(Bank o f f i c e r ' s signature)
(Title)

( Print or type name)

**To accept the customer's statement in good f a i t h , the o f f i c e r of the bank must
be a l e r t to the circumstances surrounding the c r e d i t and, i f in possession of any
information t h a t would cause a prudent person not to accept the statement without
inq ui ry , must have i nves tig ate d and be s a t i s f i e d t h a t the statement i s t r u t h f u l .
Among the f a c t s which would require such i n v e s ti g a ti o n are r e c e i p t of the s t a t e ­
ment through the mail or from a t h i r d party .

THIS FO M M
R
UST BE RETAINED BY THE BA K FO A LEAST THREE Y RS
N
R T
EA
AFTER THE CREDIT IS EXTINGUISHED