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Federal reserve Bank of Dallas

DALLAS, TEXAS

75222
Circular Wo. 71-159
July 11)., 1971

REVISED PROPOSED AMENDMENTS TO REGULATIONS G, T, AND U
(Provision of credit for broker-dealer capital)
AMENDMENT TO REGULATION U
(Exemption for broker-dealer credit by banks)

To All Banks, Broker/Dealers, Nonbank Lenders and Others
Concerned in the Eleventh Federal Reserve District:
On July 9, 1971? the Board of Governors of the Federal Reserve
System announced revisions to the proposed amendments to Regulations G,
T, and U which were initially announced on April 16, 1971- The proposals
set out conditions under which credit to provide capital to broker-dealer
firms may be obtained without regard to initial margin requirements.
Copies of the Board's press release and the proposed amendments
are enclosed. Comments by interested parties should be submitted in order
to reach the Board by August 20.
The Board also amended, effective July 10, 1971? §221.2(m) of
Regulation U, clarifying that exempt credit is not available for public
purchases of publicly traded stock in broker-dealer firms. A copy of
the amendment is enclosed for filing in the binder of Federal Reserve
Regulations furnished to all member banks.
A current version of Regulation U consists of the pamphlet,
revised effective July 8, 19&9? the supplement, effective May 6, 1970,
amendments effective August 13? 1969? May 1, 1970? and March 30, 1971?
and the enclosed amendment.
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

CREDIT BY BANKS FOR THE PURPOSE
OF PURCHASING OR CARRYING MARGIN STOCKS

A M E N D M E N T TO REGULATION U

Effective July 10, 1971, § 221.2 is amended
by revising paragraph (m) as follows:
SECTION 221.2— EXCEPTIONS TO
GENERAL RULE
Notwithstanding the provisions of § 221.1, a
bank may extend and may maintain any credit for
the purpose specified in § 2 2 1 .1,without regard to
the limitations prescribed therein, or in § 2 2 1 .3(t),
if the credit comes within any of the following
descriptions.
*

*

*

*

*

(m) Any credit extended to or maintained for a
customer for thepurpose of making a loan or con­
tribution of capital to a broker or dealer subject
to Part 220 (Regulation T) if the loan or con­
tribution is in conformity with the requirements
regarding satisfactory subordination agreements
or equities in the accounts of partners of a rule of

the Securities and Exchange Commission (Rule
15c3-l(c)(2) (A), (c)(4), and (c)(7)) (17 CFR
240.15c3-l(c)(2)(A), (c)(4), and (c)(7)) or
the capital rules of an exchange of which the
broker or dealer is a member if the members
thereof are exempt therefrom by Rule 15c3-l
(b)(2) of the Commission (17 CFR 240.15c-l
(b)(2 )) or topurchase stock in a broker or dealer
which isacorporationwhen such stockispurchased
directlyfrom the issuer and not as part of a public
distribution: Provided, That any such credit ex­
tended after April 16, 1971, shall become subject
upon renewal to such additional restrictions as the
Board ofGovernors may impose by regulation con­
cerning the conditions upon which credit may be
extended for the purpose of making such loan or
contribution: A n d provided further, That (i) allof
the proceeds of such extension of credit are so
loaned or contributed to the capital of the broker
or dealer and (ii) that all of the proceeds of any
withdrawal of such loan or contribution of capital
from the broker or dealer by the customer or
redemption of such stock shall be used to reduce
or retire said extension of credit.

F E D E R A L

R E S E R V E

r e l e a s e

For immediate r e l e a s e

J u ly 9 , 1971

The Board o f Governors o f the F ederal Reserve System today
is s u e d r e v is e d proposed amendments to i t s R eg u la tio n s G, T, and U
s e t t i n g fo r th c o n d it io n s under which c r e d i t may be o b tain ed w ith o u t
regard to i n i t i a l margin requirem ents fo r the purpose o f p rov id in g
c a p i t a l to b r o k e r -d e a le r fir m s .
The amendments were i n i t i a l l y proposed on A p r il 16, 1971,
and would have become e f f e c t i v e on J u ly 16.

Under th e r e - is s u e d pro­

p o s a l s , the amendments would become e f f e c t i v e October 1.

Comments on

the r e v is e d p rop o sa ls should be subm itted to the Board by August 20.
The Board a ls o r e v is e d i t s exemption - - o r i g i n a l l y issu e d
A p r il 16 as an in te r im measure w h ile i t c o n s id e r s th e s e p ro p o sa ls - ­
from i n i t i a l margin requirem ents fo r c r e d i t by banks for the purpose
o f p rov id in g c a p i t a l to b r o k e r -d e a le r fir m s .

The r e v i s i o n makes i t

c l e a r th a t t h i s exemption i s not a v a il a b le to fin a n c e p u b lic tra d in g
in sto c k o f such fir m s.
ft
R eg u la tio n U a p p lie s to c r e d i t extended by banks fo r the

purpose o f purchasing or c a r r y in g margin s t o c k s ; R eg u la tio n T a p p lie s
to such c r e d i t extended by brokers and d e a le r s , w h ile R eg u la tio n G
a p p lie s to such c r e d i t extended by persons o th er than banks and
brokers and d e a le r s .
The B oard's proposed r e v i s i o n s o f the amendment to i t s
r e g u la t io n s in clu ded the fo llo w in g :

-2 -

(1)

E lim in a tio n o f the requirem ent th a t le n d er s hold

c o l l a t e r a l s u f f i c i e n t to secu re a loan b e fo r e they could extend
c r e d it fo r the purpose o f p ro v id in g c a p i t a l to a b r o k e r -d e a le r .
I n s t e a d , a requirem ent would be s u b s t it u t e d th a t a committee o f a
s to c k exchange or n a t io n a l s e c u r i t i e s a s s o c i a t i o n o f which the
b r o k e r -d e a le r i s a member approve the lo a n , on the b a s i s o f a fin d in g
th a t the c r e d i t w i l l not in c r e a s e the amount o f the b r o k e r - d e a le r 's
tra d in g in s e c u r i t i e s fo r i t s own a cco u n t.
(2)

Provide th a t c r e d i t extended by banks d i r e c t l y to

b r o k e r -d e a le r s would be s u b j e c t to th e same c o n d it io n s as lo an s made
to th ir d persons for the purpose o f p ro v id in g c a p i t a l to the brokerd e a le r s .
Copies o f the r e v is e d p ro p o sa ls are a tta c h e d , to g e th e r w ith
the amendment to R eg u la tio n U, e f f e c t i v e J u ly 10, c l a r i f y i n g th a t
exempt c r e d i t i s not a v a i l a b l e for p u b lic purchases o f p u b lic ly traded
sto c k in b r o k e r -d e a le r fir m s .
-0-

FEDERAL RESERVE SYSTEM

[12 CFR FARTS 207, 220, and 221]

[R egs. G, T, and U]
SECURITIES CREDIT BY PERSONS OTHER THAN BANKS, BROKERS, OR DEALERS
CREDIT BY BROKERS A ND DEALERS
CREDIT BY BANKS FOR THE PURPOSE OF PURCHASING OR CARRYING MARGIN STOCK

Credit to Contribute Capital
to Brokers and Dealers

Pursuant to the authority contained in the Securities Exchange
Act of 1934 (15 U.S.C. 7 8 g ) , the Board of Governors proposes to revise
its proposals to amend Parts 207, 220, and 221 (36 Federal Register
7754-7756, April 24, 1971) in the following respects:
1.

Paragraph (f) of section 207.1 would be amended as set

forth below:
§ 207.1

General Rule
* * * * *

(f)
lation T .

(1)

Credit extended to broker or dealer subject to Regu­
No lender shall extend or maintain any credit for the

purpose of purchasing or carrying any margin security to any broker
or dealer who is subject to Part 220 of this Chapter (Regulation T ) ,
and after October 1, 1971, no lender shall extend any credit to any
customer to enable the customer to contribute capital to any broker or
dealer who is subject to such Part, whether such contribution is in
the form of a loan to such broker or dealer (whether subordinated or
not) or of equities in the account of partners, or to purchase stock,
in, any broker or dealer who is subject to such Part, whether with or

- 2 without collateral (other than exempted securities).

Where the credit

or the proceeds of the loan or other contribution or purchase of stock
is to be used in the ordinary course of business of such customer or
such broker or dealer, such credit is presumed to be for the purpose
of purchasing or carrying margin securities unless the lender has in
his records a statement to the contrary obtained and executed in c on­
formity with the requirements of paragraph (e) of this section.
(2)

The prohibition of this paragraph (f) shall not apply

to credit which is unsecured or secured by collateral other than
registered securities which is (i) made to a dealer"^ to aid in the
distribution of securities to customers not through the medium of a
national securities exchange, or (ii) extended to a customer who is
a broker or dealer subject to Part 220 or to a customer for the p ur­
pose of making a loan or contribution of capital to such broker or
dealer or to purchase stock in a broker or dealer when such stock is
purchased directly from the issuer and not as part of a public di s ­
tribution if the extension of credit,

loan or other contribution is

in conformity with the requirements regarding satisfactory subordination
agreements or equities in the account of partners of a rule of the
Securities and Exchange Commission (Rule 15c-l(c)(2)( A ), (c)(4), and
(c)(7) (17 CFR 240.15c3-l (c)(2)(A), (c)(4), and (c)(7)) or of the
capital rules of an exchange of which the broker or dealer is a
member if the members thereof are exempt

\f

As defined in 15 U.S.C. 78c(a)(5).

- 3 -

therefrom by Rule 15c3-l(b)(2) of the Commission (17 CFR 240.15c3-l
(b)(2)) or to purchase stock in a broker

or dealer which is a

corporation:

Provided, That in the case

of credit described inthis

paragraph that is extended after October

1, 1971, and in the case of

any renewal of such credit extended between April 17, 1971 and
October 1, 1971, such extension of credit is subject to the following
further conditions:

(i) such credit has the approval of an appropriate

committee of a national securities exchange or a national securities
association, and the committee, in addition to being satisfied that
the credit is not in contravention of any rule of the exchange or
association, is satisfied that, if the broker or dealer or an
affiliated

corporation of such broker or dealer does any dealing in

securities for its own account, the credit is not for the purpose of
increasing the amount of such dealing, (ii) in no event can the sub­
ordinated loan or contribution be repaid or the stock be redeemed
except (a) with the approval of an appropriate committee of a national
securities exchange or national securities association in the case of
the death, disability, or (in the case of a partner, officer, or
employee of the broker dealer) involuntary retirement (or if the amount
of such repayment or redemption is $10,000 or less, any retirement,
whether voluntary or involuntary) of the customer, or (b) until one
year after the subordinated extension of credit, loan, or contribution
was first made or stock first purchased and until six months after the
giving of written notice by the customer to such broker or dealer, the

- 4

-

Commission, the Securities Investor Protection Corporation, and any
national securities exchange or national securities association of
which such broker or dealer is a member of intent to demand repayment
of the extension of credit, loan, or contribution or redemption of
the stock, (iii) in no event may such credit, loan or contribution
be repaid or the stock be redeemed if the effect of such payment or
redemption would reduce the net capital of such broker or dealer below
the amount required by the net capital rule or capital rule to which
such broker or dealer is subject, or would otherwise be inconsistent
with such rule,

(iv) all of the proceeds of such extension of credit

are so loaned or contributed to the capital of such broker or dealer
or used to purchase such stock, and (v) the proceeds of any withdrawals
of such loan or contribution of capital from such broker or dealer by
the customer or redemption of such stock shall be used to reduce or
retire said extension of credit.
(3)

The Board of Governors of the Federal Reserve System may

by Order exempt from the prohibitions of this paragraph (f) and the
requirements of this Part, either unconditionally or upon specified
terms and conditions or for stated periods, any loan for the purpose of
making a loan or providing capital to a person who is subject to Part 220
of this Chapter (Regulation T ) , upon a finding that the granting of such
an exemption is necessary or appropriate in the public interest or for
the protection of investors; Provided, That the Securities Investor Protection
Corporation shall have certified to the Board that such action is
appropriate under the circumstances.

- 5 -

2.

Section 220.4 would be amended by revising paragraph

(f)(2) as set forth below:
§ 220.4

Special Accounts
* * * * *

(f)

Special miscellaneous account.

(2)(i)

* * *

Subject to the provisions of subdivisions (iii) and

(iv) of this subparagraph extend and maintain credit, (a) to or for
any partner of a firm which is a member of a national securities exchange
to enable such partner to make a contribution of capital to such firm,
or to purchase stock in an affiliated corporation of such firm, or (b)
to or for any person who is or will become the holder of stock of a
corporation which is a member of a national securities exchange to
enable such person to purchase stock in such corporation, or to purchase
stock in an affiliated corporation of such corporation; provided the
lender as well as the borrower is a partner in such member firm or a
stock holder in such member corporation, or the lender is a firm or a
stockholder in such member corporation, or the lender is a firm or
corporation which is a member of a national securities exchange and
the borrower is a partner in such firm or a stockholder in such cor­
poration;
(ii)

Subject to the provisions of subdivision

(iii) and

with respect to credit described in subdivision (ii) (b) subject to
subdivision (iv) of this subparagraph extend and maintain subordinated
credit to another creditor for capital purposes:

Provided, That:

-

(a)

6

-

Either the lender or the borrower is a firm or corpora­

tion which is a member of a national securities exchange, the other
party to the credit is an affiliated corporation of such member firm
or corporation, and, in addition to the fact that an appropriate committee
of the exchange is satisfied that the credit is not in contravention of
any rule of the exchange, the credit has the approval of such committee, or
(b)

The lender as well as the borrower is a member of such

exchange, the credit has the approval of an appropriate committee of
the exchange, and the committee, in addition to being satisfied that
the credit is not in contravention of any rule of the exchange, is
satisfied that the credit is outside the ordinary course of the lender's
business, and that, if the borrower's firm or corporation or an affiliated
corporation of such firm or corporation does any dealing in securities
for its own account, the credit is not for the purpose of increasing
the amount of such dealing.
(iii)

Fcr the purpose of subdivisions (i), (ii) and (iv) of

this subparagraph, the term "affiliated corporation" means a corporation
all the common stock of which is owned directly or indirectly by the
member firm or general partners and employees of the firm, or by the
member corporation or holders of voting stock and employees of the
corporation and an appropriate committee of the exchange has approved
the member firm's or member corporation's affiliation with such
affiliated corporation.

- 7 -

(iv)

No credit shall be extended pursuant to this sub­

paragraph after October 1, 1971, and no such credit extended between
April 16, 1971, and October 1, 1971, shall be renewed unless (a) in
no event can the subordinated loan or contribution be repaid or the
stock be redeemed except (A) with the approval of an appropriate
committee of a national securities exchange or national securities
association in the case of the death, disability,

or (in the case of

a partner, officer, or employee of the broker or dealer) involuntary
retirement (or if the amount of such repayment or redemption is $10,000
or less, any retirement, whether voluntary or involuntary) of the
borrower, or (B) until one year after such loan or contribution was
first made or such stock first purchased and until six months after
the giving of written notice by the borrower to the firm, the Securities
and Exchange Commission,

the Securities Investor Protection Corporation,

and any national securities exchange or national securities association
of which such broker or dealer is a member of intent to demand repayment
of such loan or contribution or redemption of such stock, (b) in no
event may such loan or other contribution of capital be repaid or the
stock be redeemed by a creditor to whom the loan or contribution was
made or whose stock was the subject of purchase, if the effect of such
payment or redemption would reduce the net capital of such creditor
below the amount required by the net capital rule or capital rule to
which such creditor is subject, or would otherwise be inconsistent with
such rule; (<

all of the proceeds of such extension

of credit are so

-

8

-

loaned or contributed to the capital of such firm or affiliated
corporation or used to purchase such stock and (d) the proceeds of
any withdrawal of such loan or contribution of capital from such
creditor or redemption of such stock shall be used to reduce or retire
said extension of credit.
3.

Section 221.2 would be amended by revising paragraph (m)

and section 221.3 would be amended by adding subparagraph (b) (4) and
revising paragraph ( q) as set forth below:
§ 221.2 Exceptions to General Rule.
* * * * *

(m)

Any credit extended to a broker or dealer subject to

Part 220 (Regulation T) or to a customer for the purpose of making a
loan or contribution of capital to such broker or dealer if the loan
or contribution is in conformity with the requirements regarding
satisfactory subordination agreements or equities in the accounts of
partners of a rule of the Securities and Exchange Commission (Rule
15c3-l(c)(2)(a), (c)(4), and (c)(7) (17 CFR 240.15c3-l(c)(2)(a),
(c)(4), and (c)(7)) or the capital rules of an exchange of which the
broker or dealer is a member if the members thereof are exempt
therefrom by Rule 15c3-l(b)(2) of the Commission (17 CFR 240.15c3-l
(b)(2)) or to purchase stock in a broker or dealer which is a
corporation wben such stock is purchased directly from the issuer and
not as part of a public distribution:

Provided. That in the case of

- 9 -

credit described in this paragraph that is extended after October 1, 1971,
and any renewal of such credit extended to a broker or dealer between
July 9, 1971, and October 1, 1971, or extended to a customer to make
such a loan or contribution of capital to, or to purchase such stock in
a broker or dealer between April 16, 1971 and October 1, 1971, such sub­
ordinated loan, contribution, or purchase of stock is subject to the
following further conditions:

(1)

such credit has the approval of an

appropriate committee of a national securities exchange or a national
securities association and the committee, in addition to being satisfied
that the credit is not in contravention of any rules of the exchange or
association, is satisfied that, if the broker or dealer or an affiliated
corporation of such broker or dealer does any dealing in securities for
its own account, the credit is not for the purpose of increasing the
amount of such dealing;

(2)

in no event can the subordinated loan or

contribution be repaid or the stock be redeemed except (i) with the
approval of an appropriate committee of a national securities exchange
or national securities association in the case of the death, disability,
or (in the case of a partner, officer, or employee of the broker or
dealer) involuntary retirement (or if the amount of such repayment or
redemption is $10,000 or less, any retirement, whether voluntary or
involuntary) of the customer, or (ii) until one year after the sub­
ordinated loan or contribution was first made or stock first purchased
and until six months after the giving of written notice by the customer
to the broker or dealer, the Commission, the Securities Investor Protection

- 10 Corporation, and any national securities exchange or national securities
association of which such broker or dealer is a member of intent to
demand repayment of the loan or contribution or redemption of the stock,
(3)

in no event may such loan or contribution be repaid or the stock be

redeemed if the effect of such payment or redemption would reduce the
net capital of the broker or dealer below the amount required by any
net capital or capital rule to which the broker or dealer is subject,
or would otherwise be inconsistent with such rule, (4) all of the proceeds
of such extension of credit are so loaned or contributed to the capital
of such firm or affiliated corporation, or used to purchase such stock
and (5) the proceeds of any withdrawal of such loan or contribution of
capital from such broker or dealer or redemption of such stock shall be
used to reduce or retire said extension of credit.
§ 221.3

Miscellaneous provisions

* * * * *

(b)

Purpose of a c r e d i t .

(4)

Credit extended

(Regulation T ) , or to enable a

* * *

to a broker or dealer subject to Part 220
customer to contribute capital to such a

broker or dealer, whether such contribution is in the form of a loan to
the

broker or dealer (whether subordinated or n o t ) , or of equities in

the

accounts of partners, or a purchase of stock in an incorporated

broker or dealer when such stock is purchased directly from the issuer
and not as part of a public d i s t r i b u t i o n ^ is "purpose" credit.

2/

When credit is extended to purchase stock in a broker or dealer other
than directly from the issuer or other than in a public distribution
such credit of course is "purpose" credit if the stock is "margin
stock" as described in § 221.3(b).

- 11 * * * * *

(q)

Credit

required to be secured.

Any credit extended

for a purpose described in. subparagraph (b)(4) of

(1)

this section or (2)

to a customer not subject to this part or to Part 220 of this Chapter
(Regulation T) who is engaged principally, or as one of the customer's
important activities,

in the business of extending credit for the pur­

pose of purchasing or

carrying margin stocks, is a credit for the

purpose of purchasing or carrying such stocks unless the credit and
its purposes are effectively and unmistakably separated and d is­
associated from any financing or refinancing of any purchasing or
carrying of or trading in such stocks.

Any such credit described in

subparagraph (b)(4) of this section or extended to any such customer
unless the credit is so separated and disassociated or is excepted by
§ 221.2, is a credit "subject to § 221.1" regardless of whether or not
the credit is secured by any stock; and no bank shall extend any such
credit subject to § 221.1 without collateral or without the credit being
secured as would be required by this part if it were secured by any
stock.

Any such credit subject to § 221.1 shall be subject to the other

provisions of this part applicable to credit subject to § 221.1,
including provisions regarding withdrawal and substitution of collateral.
4.

The proposed revision of paragraph (f) in § 207.1 would

delay the effective date of the amendment to October 1, 1971; clarify
that the prohibition of this paragraph does not apply to credit on
exempted securities; clarify that the exemption provided by subparagraph

- 12 (f)(2) is not available for publicly traded stock in an incorporated
broker or dealer; remove the requirement that credit of the kind
described therein be actually secured and substitute a requirement
that an appropriate committee of the exchange or national securities
association of which the broker or dealer is a member be satisfied that
the proceeds of the credit will not be used to increase the amount of
dealing in securities by the broker or dealer for its own account;
provide that credit is eligible for the exemption even though an amount
up to $10,000 is withdrawable with the permission of an appropriate
committee of an exchange or national securities association upon the
retirement of a partner, officer, or employee of the broker or dealer
before expiration of the one year waiting period; provide that notice
of withdrawal of the contribution may be given after six months of the
initial one-year waiting period have passed; and provide that such
notice must be given to any exchange or national securities association
of which the broker or dealer is a member, as well as to the broker or
dealer itself, the Commission, and the Securities Investor Protection
Corporation.
5.

The proposed revision of paragraph (f)(2) in § 220.4

would clarify that the restrictions imposed by subdivision (iv) do not
apply to credit extended by a firm to its partners or by an incorporated
broker/dealer to its officers or employees, or officers or employees of
its affiliated corporations; would delay the effective date of the amend­
ment to October 1, 1971; provide that credit is eligible for the exemption

- 13 -

even though an amount up to $10,000 is withdrawable with the permission
of appropriate committee of an exchange or national securities association
upon the retirement of a partner, officer, or employee of the broker or
dealer before the expiration of the one-year waiting period; provide
that notice of withdrawal of the contribution may be given after six
months of the initial one-year waiting period have passed; and provide
that such notice must be given to any exchange or national securities
association of which the broker or dealer is a member, as well as to
the broker or dealer itself, the Commission, and the Securities
Investor Protection Corporation.
6.

The proposed revision of paragraph (m) in § 221.2 would

provide that credit extended directly by banks to brokers and dealers
would be subject to the same restrictions on withdrawal as credit
extended to third persons for the purpose of making contributions of
capital to the brokers and dealers; clarify that the exemption is not
available for publicly traded stock in an incorporated broker or dealer;
remove the requirement that credit of the kind described therein be
actually secured and substitute a requirement that an appropriate
committee of the exchange or national securities association of which
the broker or dealer is a member be satisfied that the proceeds of the
credit will not be used to increase the amount of dealing in securities
by the broker or dealer for its own account; provide that credit is
eligible for the exemption even though an amount up to $10,000 is
withdrawable upon the retirement of a partner, officer, or employee
of the broker or dealer before expiration of the one-year waiting period;

- 14 -

provide that notice of withdrawal of the contribution may be given
after six months of the initial one-year waiting period have passed;
and provide that such notice must be given to any exchange or national
securities association of which the broker or dealer is a member, as
well as to the broker or dealer itself, the Commission, and the
Securities Investor Protection Corporation.
7.
§ 221.3 would

The revision to the proposed new subparagraph (b)(4) of
clarify that credit

extended directly to a broker or

dealer, by a bank, for the purpose of providing capital to the broker
or dealer is "purpose" credit, but that credit to purchase or carry
publicly traded stock of a broker or dealer is not "purpose" credit
(unless the stock is itself a margin stock).
8.

The proposed new subparagraph (c)(2) of § 221.3 is

9.

Paragraph (q) of § 221.3 would be amended to provide

deleted.

that credit extended for the purpose of providing capital to a broker
or dealer, as

described in subparagraph (b)(4) of § 221.3, must be

secured by collateral held

by the

bank unless segregated and disassociated

from the business of purchasing and carrying securities, or exempted by

§

221.2 .
If adopted by the Board, the changes will apply to credit

extended by banks, broker/dealers, and persons subject to Regulation G
after October 1, 1971, and to renewals after October 1, 1971, of credit
extended by banks after April 16, 1971, except in the case of credit

- 15 -

extended by banks directly to broker/dealers where the restrictions
would apply to such credit extended after October 1, 1971, and to
renewals after October 1, 1971, of such credit extended after July 9,
1971.
This notice is published pursuant to section 553(b) of
Title 5, United States Code, and § 262.2(a) of the rules of procedure
of the Board of Governors of the Federal Reserve System (12 CFR 262.2(a)).
To aid in the consideration of these matters by the Board,
interested persons are invited to submit relevant data, views, or
arguments.

Any such material should be submitted in writing to the

Secretary, the Board of Governors of the Federal Reserve System,
Washington, D. C.
1971.

20551, to be received not later than August 20,

Such material will be made available for inspection and copying

upon request, except as provided in § 261.6(a) of the Board's Rules
Regarding Availability of Information.
By order of the Board of Governors, July 6, 1971.

( S i g n e d ) K e n n e t h A. K en y on
Kenneth A. Kenyon,
Deputy Secretary.

[SEAL]