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Federal R eserve Bank
OF DALLAS
ROBERT
D. M C T E E R , J R .
p re s id e n t
AND CH IE F EX ECU TIV E O F F I C E R
jE H lU & ry
12, 199 6
DALLAS, TEXA S
75265-5906
Notice 96-04
TO:
The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Request for Comments on
Proposed Amendments to Regulation U
(Credit by Banks for the Purpose of Purchasing
or Carrying Margin Stocks)
DETAILS
The Board of Governors of the Federal Reserve System has requested public
comment on proposed amendments to Regulation U (Credit by Banks for the Purpose of
Purchasing or Carrying Margin Stocks).
The proposed amendments call for
•
explicit guidance for banks financing margin stock that has been pur
chased by their customers through a broker-dealer on a delivery-versuspayment (C.O.D.) basis.
• greater flexibility for withdrawals and substitutions of collateral when
margin stock is pledged along with cash equivalents and other securities by
treating the entire credit as a single loan.
In addition, the proposed amendments would conform Regulation U to
changes recently proposed for Regulation T about increased loan value for exchangetraded options and money market funds.
The Board must receive comments by February 15, 1996. Comments should
be addressed to William W. Wiles, Secretary, Board of Governors of the Federal
Reserve System, 20th Street and Constitution Avenue, N.W., Washington, D.C. 20551.
All comments should refer to Docket No. R-0905.
For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal
Reserve Bank of Dallas: Dallas Office (800) 333 -4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston
Branch Intrastate (800) 392-4162, Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
ATTACHMENT
Attached is a copy of the Board’s notice as it appears on pages 63660-63,
Vol. 60, No. 238, of the Federal Register dated December 12, 1995.
MORE INFORMATION
For more information, please contact Eugene Coy at (214) 922-6201. For
additional copies of this Bank’s notice, please contact the Public Affairs D epartm ent at
(214) 922-5254.
Sincerely yours,
18
.
.
FEDERAL REGISTER
December 12, 1995
Pages 63660-63
Request for Comments on
Proposed Amendments to
Regulation U
(Credit by Banks for the
Purpose of Purchasing or
Carrying Margin Stocks)
Proposed Rules
Federal Register
Vol. 60, No. 238
Tuesday, December 12, 1995
This section of the FEDERAL REGISTER
contains notices to the public ot the proposed
issuance of rules and regulations. The
purpose of these notices is to give interested
persons an opportunity to participate in the
rule making prior to the adoption of the final
rules.
FEDERAL RESERVE SYSTEM
12 CFR Part 221
[Regulation U; Docket No. R -0905]
RIN 7100-AB65
Securities Credit Transactions; Review
of Regulation U, “Credit by Banks for
the Purpose of Purchasing or Carrying
Margin Stocks”
Board of Governors of the
Federal Reserve System.
ACTION: Proposed rule.
AGENCY:
The Board is proposing
amendments to Regulation U, the
regulation that covers extensions of
credit by banks that are secured in
whole or in part by those publicly
traded securities defined as “margin
stock”. These amendments are being
proposed as part of the Board’s program
to periodically review its regulations as
well as te fulfill the requirements of
section 303 of the Riegle Community
Redevelopment and Regulatory
Improvement Act of 1994. Two of the
most im portant effects of the proposed
amendments w ould be to provide:
Explicit guidance for banks financing
margin stock purchased by their
customers through a broker-dealer on a
delivery-versus-payment (or C.O.D.)
basis; and greater flexibility for
withdrawals and substitutions of
collateral when margin stock is pledged
along w ith cash equivalents and other
securities by treating the entire credit as
a single loan. In addition, amendments
w ould conform Regulation U to changes
recently proposed for Regulation T
regarding increased loan value for
exchange-traded options and money
market mutual funds. Technical
amendments would update the
regulation to reflect a 1991 Board
interpretation allowing lead banks to
apply Regulation U to syndicated loans
independent of other credit extended by
syndicate banks and restore language
indicating that the exemption for
temporary financing of customer
SUMMARY:
securities transactions does not apply to
securities purchased at a broker-dealer.
DATES: Comments should be received on
or before February 15,1996.
ADDRESSES: Comments should refer to
Docket No. R-0905, and may be mailed
to William W. Wiles, Secretary, Board of
Governors of the Federal Reserve
System, 20th Street and Constitution
Avenue, NW., Washington, DC 20551.
Comments also may be delivered to
Room B—222 of the Eccles Building
between 8:45 a.m. and 5:15 p.m.
weekdays, or to the guard station in the
Eccles Building courtyard on 20th
Street, NW. (between Constitution
Avenue and C Street, NW.) at any time.
Comments received will be available for
inspection in Room MP-500 of the
Martin Building between 9 a.m. and 5
p.m. weekdays, except as provided in 12
CFR 261.8 of the Board’s rules regarding
availability of information.
including (but not limited to) whether
the regulation can be eliminated,
simplified, or the burdens imposed
thereunder eased.
1. Financing of Securities Purchased on
a DVP Basis
Banks often act as custodians for their
customers’ securities. These securities
are generally purchased via a registered
broker-dealer in a cash account and sent
to the bank on a delivery-versuspayment (DVP) basis.1 Banks
traditionally have not accepted
securities in a DVP transaction if the
customer does not have the funds to
make full payment on hand at the bank.
Accepting securities without having the
customer’s full payment on hand
involves a credit relationship similar to
a customer using a margin account at a
broker-dealer.
In the past few years, System
examiners and staff of the Securities and
FOR FURTHER INFORMATION CONTACT:
Exchange Commission have alleged that
Scott Molz, Senior Attorney, or Angela
certain banks were financing these DVP
Desmond, Senior Counsel, Division of
purchases without documentation and
Banking Supervision and Regulation,
in excess of margin requirements
(202) 452-2781. For users of
Telecommunications Device for the Deaf contained in Regulation U. The banks
were found in violation of Regulation U
(TDD), please contact Dorothea
or settled charges without admitting or
Thompson, (202) 452-3544.
denying their culpability.2
SUPPLEMENTARY INFORMATION: The Board
Provided customers have sufficient
is proposing amendments to Regulation
collateral, Board staff believes financing
U (12 CFR part 221), “Credit by Banks
of securities purchases can be
for the Purpose of Purchasing or
accommodated w ithin the existing
Carrying Margin Stocks,” as part of its
provision for revolving-credit
program to periodically review its
agreements found in § 221.3(c) of
regulations and to satisfy requirements
Regulation U, with the addition of some
under section 303 of the Riegel
clarifying language.3 However, it should
Community Redevelopment and
Regulatory Improvement Act of 1994.
be noted that this will not result in
exactly equal regulation between banks
The proposed amendments include
coverage of bank financing of securities
and broker-dealers because the
purchased by customers through a
combination of Board, SEC, and SRO
broker-dealer on a cash basis and
rules applicable to broker-dealers in this
treatment of mixed-collateral loans
area cannot be recreated in Regulation
(loans secured in part by margin stock
and in part by other collateral) as a
1 Customers purchase securities at a brokerdealer on either a cash or margin basis, using either
single loan if all collateral consists of
a cash or margin account. When a customer
securities and cash equivalents.
purchases a security on a cash basis, he either
Conforming amendments are proposed
deposits the full purchase price in the cash account
in light of the recently published
or asks to have the security sent to his agent
(usually a custodial bank) against full payment of
amendments to Regulation T (12 CFR
the purchase price. This latter method is described
part 220), “Credit by Brokers and
in section 220.2(e) of Regulation T as a delivery
Dealers” (see 60 FR 33763; June 29,
against paym ent, paym ent against delivery, or
1995) that w ould increase the loan value C.O.D. transaction and is generally referred to by
the industry as a DVP transaction.
of exchange-traded options and money
2 See, e.g., SEC v. Hansen, 726 F. Supp. 74
market mutual funds. Two technical
(S.D.N.Y. 1989).
amendments are discussed below.
3 Applying the section on revolving-credit
In addition to the amendments
agreements w ill ensure that banks financing such
described in this proposal, comment is
purchases establish credit limits for their
invited on all areas of Regulation U,
customers, including limits on intraday trading.
Federal Register / Vol. 60, No. 238 / Tuesday, December 12, 1995 / Proposed Rules
U.4 Board staff believes that the
supervisory structure for banking
institutions and the requirement that
banks establish credit agreements before
financing these transactions will lead
banks to impose some additional
limitations themselves, but because the
additional requirements applicable to
broker-dealers are not contained in
Regulation T, they cannot be imposed
by Regulation U.
2. Mixed-Collateral Loans
Regulation U does not apply to
extensions of securities credit that are
not secured at least in part by margin
stock. Loans secured in part by margin
stock and in part by other collateral are
known as “mixed-coHateral” loans and
Regulation U has always required some
kind of separation for these types of
loans. Although a single credit
agreement may be used,5 § 221.3(e) of
Regulation U states that a loan secured
in part by margin stock and in part by
other collateral “shall be treated as two
separate loans.v This separation
requirement has been the subject of
numerous inquiries since the last
revision of Regulation U and has led to
this proposal for a relaxation of the
regulation in this area.6
The section on mixed-collateral loans
does not present a problem when first
applied at the time the loan
commitment is made, as it merely
requires a bank to determine the loan
value of margin stock collateral and
then verify that the other collateral has
a good faith loan value sufficient to
make up the difference between the loan
value of the margin stock and the
amount of credit being extended and to
4 Although the Board does not have a
maintenance margin in its regulations, brokerdealers are required to monitor extensions of
securities credit under SRO rules, call for additional
collateral when market values fall below a specified
percentage, and sell some of the customer's
securities if the additional collateral is not received.
In addition, SRO rules require customers opening
margin accounts to deposit a minimum amount of
equity in cash or securities (generally $2000).
5The ability of a bank to use a single credit
agreement was a reform instituted in 1983. Before
that time, separate credit agreements were required
for the stock collateral and the nonstock collateral.
6 Before 1983, Regulation U covered loans secured
by any stock. A “mixed-collateral” loan was one
secured in part by stock and in part by other
collateral. Now that the regulation’s scope has been
reduced to cover only loans secured by margin
stock, a “mixed-collateral” loan is one secured in
part by margin stock and in part by other collateral.
“Other collateral” may include stock that would
have been covered under the previous version of
Regulation U and therefore not subject to the
provisions covering mixed-collateral loans. This
reduction in the scope of the regulation had the
unintended effect of reducing the flexibility for
withdrawals and substitutions of collateral for
mixed-collateral loans.
allocate the credit secured by each
tranche.
There have been, however, a number
of inquiries concerning the interplay of
§ 221.3(e) (mixed-collateral loans) and
§ 221.3(f) (withdrawals and
substitutions) of Regulation U. As an
example, suppose the value of a
custom er’s nonmargin stock collateral
has increased over time but the value of
the margin stock has not. In spite of the
fact that the overall value of the
collateral has increased, the customer
cannot withdraw margin stock because
this “separate” loan does not have
sufficient loan value to permit the
withdrawal. In other words, changes in
collateral value in one tranche have no
effect on the other tranche. This
separation requirement makes collateral
management extremely difficult.
Board staff has tried to respond to
inquiries in this area through
interpretation of the existing
regulation.7 However, in light of the
growth of revolving credit agreements
secured by more than just margin stock,
it appears that the current rule is
unnecessarily burdensome to effectuate
the statutory scheme of regulation.8
The proposed amendment to the
section on mixed collateral loans would
still require the regulatory segregation of
collateral, but would expand the types
of collateral that could be securing loans
that currently can only be secured by
margin stock to include all financial
instruments (stocks, bonds, and cash
equivalents).9 Acting in good faith, a
bank would be able to value all financial
instruments in accordance with the
margin requirements in the Supplement
to Regulation U (§ 221.8) and permit
substitutions w ithin this group in
conformity with the section on
withdrawals and substitutions, meaning
the aggregate loan value of the
substituted collateral must at least equal
the aggregate loan value of the collateral
withdrawn. Under the proposed
amendment, credit secured by
7 See, e.g.. Federal Reserve Regulatory Service 5
923.2, 5-923.41, and 5-923.42.
8 Many customers who have securities to pledge
as collateral have more than just margin stock (they
often have debt securities as well). The section on
mixed-collateral loans presumes there will be no
change in the collateral once it has been pledged.
The number of inquiries in this area is an indication
that this is often not the case.
’ One of the goals of the section on mixedcollateral loans is to ensure that a lender does not
inflate the loan value of nonmargin collateral to
offset the fact that the margin regulations limit the
value of margin stock to 50 percent of its current
market value. Most financial instruments have
readily available prices, lessening the possibility for
evasion of the margin requirements. Other
collateral, such as real estate, boats and
automobiles, is more likely to have a less well
agreed upon market value.
63661
nonfinancial collateral, such as real
estate, would continue to be treated as
a separate loan. Comment is invited on
the continuing need for separation of
collateral between financial instruments
and other collateral.
3. Conforming Amendments
Although the Board’s margin
regulations provide a level playing field
for lenders extending purpose credit
secured by margin stock, statutory and
other considerations have always made
the scope of Regulations G and U less
broad than that of Regulation T.10 Two
of the proposed amendments to
Regulation T would make it less
restrictive than Regulation U, leading
the Board to propose conforming
amendments. The two amendments
would allow 50 percent margin for
exchange-traded options (currently
given no loan value) and good faith loan
value for money market mutual funds
(currently given 50 percent loan value).
In addition, the definitions of “cash
equivalent” and “examining authority”
would be added from the Regulation T
proposal to the definitional section of
Regulation U.
4. Technical Amendments
Two technical amendments are
proposed. The first would add a
sentence to the “single-credit rule" to
reflect a 1991 Board interpretation
allowing the lead bank to perform
Regulation U compliance for syndicated
loans. The other would reinsert
language inadvertently deleted in 1983
from one of the Regulation U
exemptions for credit extended to
persons other than broker-dealers.11
5. Section-by-Section Explanation of
Proposed Changes to Regulation U
Section 221.1
Scope.
Authority, Purpose and
No substantive changes.
Section 221.2 Definitions.
(1) Eliminate letter designations for
definitions in § 221.2 and references
thereto in §§ 221.1(b), 221.3(a) and
221.7(c)(2).
(2) Add definitions (from Regulation
T) for cash equivalent and examining
authority (referred to in § 221.5(c)(9)(ii)).
10For example, although the Securities Exchange
Act of 1934 requires the Board to set margins for
all purchases of securities, it specifically excludes
bank loans on nonconvertible debt securities.
11 The exemption for credit to a customer to
temporarily finance the purchase or sale of
securities for prompt delivery contained a
restriction prohibiting its use for securities
purchased at a broker-dealer. This restriction was
inadvertently dropped in 1983 and it is being
reinserted.
63662
Federal Register / Vol. 60, No. 238 / Tuesday, December 12, 1995 / Proposed Rules
(3) Exclude money market funds from
definition of margin stock so as to give
allow them good faith loan value.
(4) Edit statement in definition of
m axim um Joan value that “ [p]uts, calls
and combinations thereof have no loan
value” to reflect loan value for
exchange-traded options.
Section 221.3
General Requirements
221.3 (a)—General Rule
(1) Edit statement in general rule that
collateral other than margin stock has
good faith loan value to reflect fact that
puts and calls that do not qualify as
margin stock have no loan value.
Regulatory Flexibility Act
As noted in the summary, the
proposed amendments should improve
the regulation by providing explicit
guidance on certain lending practices
and greater flexibility in verifying
compliance for certain types of loans.
The Board believes there will be a
beneficial economic impact if this
proposal is adopted. Comments are
invited on this statement.
practical utility; (b) the accuracy of the
Federal Reserve’s estimate of the burden
of the proposed information collection,
including the cost of compliance; (c)
ways to enhance the quality, utility, and
clarity of the information to be
collected; and (d) ways to minimize the
burden of information collection on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Paperwork Reduction Act
List of Subjects in 12 CFR Part 221
Banks, banking, Brokers, Credit,
Federal Reserve System, Margin, Margin
requirements, Investment companies,
Investments, Reporting and
recordkeeping requirements, Securities.
For the reasons set out in the
preamble, the Board proposes to amend
12 CFR Part 221 as follows:
In accordance w ith section 3506 of
the Paperwork Reduction Act of 1995
(44 U.S.C. Ch. 35; 5 CFR 1320 Appendix
A .l), the Board reviewed the proposed
221.3(c)—Revolving-Credit or Multiple- rule under the authority delegated to the
Draw Agreements
Board by the Office of Management and
Budget. Comments on the collections of
(2) Expand subsection to cover
information should be sent to the Office
financing of securities purchased on a
of Management and Budget, Paperwork
payment-against-delivery (or DVP)
Reduction Project (7100-0115),
basis.
Washington, DC 20503, w ith copies of
(3) Clarify that FR U - l is always taken such comments to be sent to Mary M.
when arrangement is established and
McLaughlin, Federal Reserve Board
must be amended for subsequent
Clearance Officer, Division of Research
disbursements if (i) all collateral is not
and Statistics, Mail Stop 97, Board of
pledged up front, or (ii) collateral has
Governors of the Federal Reserve
been withdrawn or substituted between
System, Washington, DC 20551.
disbursements.
The collection of information
requirements in this proposed
221.3(d)—Single Credit Rule
regulation are found in 12 CFR part 221.
(4) Clarify that single credit rule does
This information is required by
not cover syndicated loans (see Board
Regulation U and authorized by the
Interpretation on loan participations in
Securities Exchange Act of 1934 (15
section 221.124 of Regulation U).
U.S.C. 78g and 78w). The respondents
are for-profit financial institutions.
221.3(e)—Mixed Collateral Loans
Records must be retained for three years
(5) Alter application of rule so that
after the credit is extinguished.
instead of separating margin stock
The Federal Reserve may not conduct
collateral from nonmargin stock
or sponsor, and an organization is not
collateral, securities and cash
required to respond to, this information
equivalents are separated from other
collection unless it displays a currently
types of collateral.
valid OMB control number. The OMB
control num ber is 7100-0115.
Section 221.4 Agreements o f
No additional reporting requirements
Nonmem ber Banks
or modifications to existing
Editorial change reflects combining of recordkeeping requirements are
Forms FR T - l and FR T-2.
proposed. The current estimated burden
is 4 minutes per response. There are
Section 221.5 Special Purpose Loans
10,637 subject respondents making an
to Brokers and Dealers
estimated average of 212 of the subject
No substantive changes.
loans annually, for a total of 157,853
hours of annual hurden for
Section 221.6 E xem pted Transactions
recordkeeping. Based on an hourly cost
Restore language to 221.6(f) that credit of $20, the annual cost to the public is
is not to be used by a customer to
estimated to be $3,157,060.
purchase securities from a brokerBecause the records would be
dealer.
maintained at banks and the notices are
not provided to the Federal Reserve, no
Section 221.7 OTC List
issue of confidentiality under the
No substantive changes.
Freedom of Information Act arises.
Comments are invited on: (a) Whether
Section 221.8 Supplem ent
the proposed collection of information
Allow options that qualify as margin
is necessary for the proper performance
stock the same loan value as other
of the Federal Reserve’s functions;
margin stock.
including whether the information has
PART 221—CREDIT BY BANKS FOR
THE PURPOSE OF PURCHASING OR
CARRYING MARGIN STOCK
{REGULATION U)
1. The authority citation for Part 221
is revised to read as follows:
Authority: 15 U.S.C. 78c, 78g, 78h, 78q,
and 78w.
§221.1
[Amended]
2. Section 221.1(b) is amended by
removing the word “ § 221.2(b)” and
adding “ § 221.2” in its place.
3. Section 221.2 is amended as
follows:
a. By removing the alphabetic
paragraph designations from the
definitions and placing the definitions
in alphabetical order;
b. By removing the paragraph
designation (1) in front of the definition
of Bank, by designating the text
following the work Bank as paragraph
(1), by revising newly designated
paragraph (1) introductory text and
paragraph (2) introductory text;
c. By adding new definitions in
alphabetical order for Cash equivalent
and Examining authority,
d. By removing the period at the end
of paragraph (6)(iii) and adding “ ; or” in
its place, and by adding new paragraph
(6)(iv) to the definition of Margin stock-,
e. By revising the third sentence of the
definition of M axim um loan value.
The additions and revisions read as
follows:
§22 1.2
Definitions.
*
*
*
*
*
Bank (1) Has the meaning given to it
in section 3(a)(6) of the Act (15 U.S.C.
78c(a)(6)) and includes:
*
*
*
*
*
(2) Bank does not include:
*
*
*
*
*
Federal Register / Vol. 60, No. 238 / Tuesday, December 12, 1995 / Proposed Rules
Cash equivalent means negotiable
bank certificates of deposit, bankers
acceptances issued by banking
institutions in the United States and
payable in the United States, and any
security issued by an investment
company registered under section 8 of
the Investment Company Act of 1940
(15 U.S.C. 80a-fl) that is a money market
fund in compliance with all applicable
requirements of SEC Rule 2a-7 (17 CFR
270.2a—7).
*
*
*
*
*
Exam ining authority means:
(1) The national securities exchange
or national securities association of
which a broker or dealer is a member;
or
(2) If a member of more than one selfregulatory organization, the organization
designated by the Securities and
Exchange Commission (SEC) as the
examining authority for the creditor.
*
*
*
*
*
Margin stock * * *
( 6) * * *
(iv) A company which is a money
market fund in compliance with all
applicable requirements of SEC Rule
2a-7 (17 CFR 270.2a-7).
M axim um loan value * * * Puts,
calls and combinations thereof that do
not qualify as margin stock have no loan
value. * * *
*
*
*
*
*
4. Section 221.3 is amended as
follows:
a. By revising the last sentence of
paragraph (a)(1);
b. By revising paragraph (c);
c. By adding a sentence to the end of
paragraph (d)(1);
d. By revising paragraph (e). The
revisions and additions read as follows:
§221.3 General requirements.
(a) * * * (1) * * * All other
collateral, except for puts and calls, has
good faith loan value, as defined in
§ 221.2 of this part.
*
*
*
*
*
(c) Purpose statem ent fo r agreements
involving revolving or m ultiple-draw
credit or financing o f securities
purchases on a payment-againstdelivery basis. (1) If a bank extends
credit, secured directly or indirectly by
any margin stock, in an amount
exceeding $100,000, under an
agreement involving revolving or other
multiple-draw credit or financing of
securities purchases on a paymentagainst-delivery basis, Form FR U -l
must be executed at the time the credit
arrangement is originally established
and must be amended as described in
paragraph (c)(2) of this section for each
disbursement if all of the collateral for
the agreement is not pledged at the time
the agreement is originally established.
(2) If a purpose statement executed at
the time the credit arrangement is
initially made indicates that the purpose
is to purchase or carry margin stock, the
credit will be deemed in compliance
with this part if the maximum loan
value of the collateral at least equals the
aggregate amount of funds actually
disbursed or at the end of any day on
which credit is extended under the
agreement, the bank calls for additional
collateral sufficient bring the credit into
compliance with § 221.8 (the
Supplement). For any purpose credit
disbursed under the agreement, the
bank shall obtain and attach to the
executed Form FR U -l a current list of
collateral which adequately supports all
credit extended under the agreement.
(d) * * * (1) * * * Syndicated loans
need not be aggregated with other
unrelated purpose credit extended by
the same bank.
*
*
*
*
*
(e) M ixed collateral loans. (1) A
purpose credit secured in part by
margin stock and in part by collateral
other than securities and cash
equivalents shall be treated as two
separate loans, one secured by margin
stock and any other securities and cash
equivalents and one by all other
collateral. A bank may use a single
credit agreement, if it maintains records
identifying each portion of the credit
and its collateral.
(2) A purpose credit secured entirely
by securities and cash equivalents may
be treated as a single loan.
*
*
*
*
*
5. Section 221.4 is amended by
revising the parenthetical phrase in the
middle of paragraph (a) to read as
follows:
§ 221.4
Agreem ents of nonm em ber banks.
(a) * * * (See Form FR T - l, T-2)
*
*
*
*
*
*
*
*
6. Section 221.6 is amended by
revising paragraph (f) to read as follows:
§221.6 Exem pted transactions.
*
*
*
•
*
*
(f) To any customer, other than a
broker or dealer, to temporarily finance
the purchase or sale of securities for
prompt delivery, if the credit is to be
repaid in the ordinary course of
business upon completion of the
transaction and is not extended to
enable the customer to pay for securities
purchased in an account subject to part
220 of this chapter;
*
*
*
*
*
63663
7. Section 221.7 is amended by
revising paragraph (c)(2) to read as
follows:
§221.7 Requirements for the list of OTC
margin stocks.
*
*
*
*
*
(c) * * *
(2) No longer substantially meets the
provisions of paragraph (b) of this
section or the definition of OTC margin
stock in § 221.2 of this part.
*
*
*
*
*
8. Section 221.8 is amended by
revising paragraphs (a) and (c) to read as
follows:
§ 221.8 Supplement, maximum loan value
of margin stock and other collateral.
(a) M axim um loan value o f margin
stock. The maximum loan value of any
margin stock is fifty percent of its
current market value.
*
*
*
*
*
(c) M axim um loan value o f options.
Except for options that qualify as margin
stock, puts, calls, and combinations
thereof have no loan value.
By order of the Board of Governors o f the
Federal Reserve System, December 6,1995.
William W. Wiles,
Secretary of the Board.
(FR Doc. 95-30131 Filed 12-11-95; 8:45 am]
BILLING CODE *210-01-P
@FedFRASER