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Federal R eserve Bank
OF DALLAS
W IL L IA M

H. W ALLACE

DALLAS, TEXAS 75222

FIRST VICE PRESIDENT
AND CHIEF OPERATING OFFICER

March 24, 1988
Circular 88-24

TO:

The Chief Executive Officer of all
member banks, bank holding companies
and others concerned in the
Eleventh Federal Reserve District

SUBJECT
and U —

Slip sheet with amendments to Regulations G, T
Securities Credit Transactions
DETAILS

The Board of Governors of the Federal Reserve
System has published amendments in slip-sheet form to
Regulations G, T and U, effective February 1988. The
new slip sheet should be inserted in Volume 2 of your
Regulations Binders and should replace the one dated
September 1987.

ATTACHMENTS
Attached is the slip sheet to Regulations G, T
and U.

MORE INFORMATION
For more information, please contact Dean A.
Pankonien of this Bank's Legal Department at (214)
651-6228.
Sincerely yours,

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks
and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800)
442-7140 (intrastate) and (8001 527-9200 (interstate).

Board of Governors of the Federal Reserve System

Amendments to Regulations G, T, and U
Securities Credit Transactions
February 1988*

REG U LA TIO N G
1. Effective November 13, 1984, section
207.2(i) o f Regulation G is amended by add­
ing a new paragraph (3) and renumbering
paragraphs (3), (4), and (5) to (4), (5), and
(6). The new paragraph (3) reads as follows:
(3) any OTC security designated as quali­
fied for trading in the National Market Sys­
tem under a designation plan approved by
the Securities and Exchange Commission
(NMS Security);

2. Effective April 19, 1985, section 207.2(i)(6)
o f Regulation G is amended (1) by deleting
the period and substituting or” at the end
o f subparagraph (ii) and (2) by adding a
new subparagraph (iii):
(iii) a company which issues face-amount
certificates as defined in 15 USC
80a-2(a)(15), but only with respect of such
securities.
The parenthetical cite in subparagraph (ii) is
corrected to read "15 USC 78c(a)(12)’\

3. Effective November 13, 1984, section 207.3
o f Regulation G is amended by adding a
new paragraph (q) to read as follows:
(q) Lack o f notice o f NM S security desig­
nation. Failure to treat an NMS security as
a margin stock in connection with an exten­
sion of credit shall not be deemed a viola­

* The Board's margin regulations, as amended effective
January 25, 1988, consist of—
• the Securities Credit Transactions pamphlet dated De­
cember 1983 (see inside cover) and
• this slip sheet.
Item 7 is new. All other items were included on the April
1985 slip sheet.

tion of this part if the designation is made
between quarterly publications of the
Board’s list of OTC margin stocks and the
lender does not have actual notice of the
designation.

4. Effective July 22, 1985, section 207.5 o f
Regulation G is amended by revising the
heading and adding a new paragraph (c) as
follows:
(c) Credit to ESOPs. A lender may extend
and maintain purpose credit without regard
to the provisions of this part, except for sec­
tions 207.3(a) and 207.3(o), if such credit
is extended to an employee stock ownership
plan (ESOP) qualified under section 401 of
the Internal Revenue Code, as amended
(26 USC 401).

R EG U LA TIO N T
5. Effective November 13, 1984, section
220.2(o) o f Regulation T is amended by
numbering the listed items and adding an
item (paragraph (4)). Subsection (o) now
reads as follows:
(o) “Margin security” means (1) any reg­
istered security;
(2) any OTC margin stock;
(3) any OTC margin bond;
(4) any OTC security designated as
qualified for trading in the National Mar­
ket System under a designation plan ap­
proved by the Securities and Exchange
Commission (NMS security); or
(5) any security issued by either an
open-end investment company or unit in­
vestment trust which is registered under
section 8 of the Investment Company
Act of 1940 (15 USC 80a-8).
1

Securities Credit Transactions
6. Effective August 27, 1987, section 220.2(r)
is amended by deleting the period at the end
o f paragraph (2)(iii) and inserting or" and
by adding a new paragraph (3):
(3) A mortgage-related security as defined
in section 3(a) (41) of the act.

7. Effective January 25, 1988, section 220.3 is
amended by adding a new paragraph (e)(4)
to read as follows:
(4) A creditor may accept, in lieu of secu­
rities, a properly executed exercise notice
for a stock option issued by the customer’s
employer and instructions to the issuer to
deliver the resulting stock to the creditor.
Prior to acceptance, the creditor must veri­
fy that the issuer will deliver the securities
promptly and the customer must designate
the account into which the securities are to
be deposited.

8. The last sentence o f section 220.4(c)(1) o f
Regulation T is corrected to read as fo l­
lows:

SECTION 220.9— Nonsecurities
Credit and Employee Stock Ownership
Account
(a) In a nonsecurities credit account a
creditor may * * *
(4) extend and maintain credit to em­
ployee stock ownership plans without re­
gard to the other sections of this part.
*

*

•

*

•

11. Effective April 19, 1985, section 220.13 o f
Regulation T is amended by adding a new
paragraph (c):
(c) a subsequent loan or advance on a
face-amount certificate as permitted under
15 USC 80a-28(d).

12. Section 220.14(b)(2) o f Regulation T is
corrected by adding the word "and" after
the semicolon.

13. Effective April 13, 1984, section
220.14(b)(3) o f Regulation T is amended
to read as follows:

Additional margin is required on any day
when the day’s transactions create or in­
crease a margin deficiency in the account
and shall be for the amount of the margin
deficiency so created or increased.

(3) the deposit consists of any margin se­
curity and complies with the rules of the
clearing agency which have been ap­
proved by the SEC.

9. Effective September 30, 1985, section
220.5(c)(2) is amended to read as follows:

14. Effective September 22, 1985, section
220.18 o f Regulation T is revised to read
as follows:

(2) Margin fo r options on equity securities.
The required margin for each transaction
involving any short put or short call on an
equity security shall be the amount set forth
in section 220.18 (the supplement).

10. Effective July 22, 1985, section 220.9 o f
Regulation T is amended by revising the
heading and adding a new paragraph
(a)(4) to read as follows:
2

SECTION 220.18— Supplement:
Margin Requirements
The required margin for each security po­
sition held in a margin account shall be as
follows:
(a) Margin equity security, except for an
exempted security or a long position in an
option: 50 percent of the current market
value of the security.
(b) Exempted security, registered non­

Securities Credit Transactions
convertible debt security or OTC margin
bond: the margin required by the creditor
in good faith.
(c) Short sale of nonexempted security:
150 percent of the current market value of
the security, or 100 percent of the current
market value if a security exchangeable or
convertible within 90 calendar days with­
out restriction other than the payment of
money into the security sold short is held
in the account.
(d) Short sale of an exempted security:
100 percent of the current market value of
the security plus the margin required by
the creditor in good faith.
(e) Nonmargin, nonexempted security or
a long position in any option: 100 percent
of the current market value.
(f) Short put or short call on a security,
certificate of deposit, securities index or
foreign currency:
(1) in the case of puts and calls issued
by a registered clearing corporation
and listed or traded on a registered na­
tional securities exchange or a regis­
tered securities association, the
amount, or other position (except in
the case of an option on an equity secu­
rity), specified by the rules of the regis­
tered national securities exchange or
the registered securities association au­
thorized to trade the option, provided
that all such rules have been approved
or amended by the SEC; or
(2) in the case of all other puts and
calls, the amount, or other position
(except in the case of an option on an
equity security), specified by the main­
tenance rules of the creditor’s self-reg­
ulatory organization.

REG U LA TIO N U
15. Effective November 13, 1984, section
221.2(h) o f Regulation U is amended by
adding a new paragraph (3) and renum­
bering paragraphs (3), (4), and (5) to (4),

(5), and (6). The new paragraph (3) reads
as follows:
(3) any OTC security designated as qual­
ified for trading in the National Market
System under a designation plan ap­
proved by the Securities and Exchange
Commission (NMS security);
16. Effective April 19, 1985, section
221.2(h)(6) o f Regulation U is amended
(1) by deleting the period and substituting
or" at the end o f subparagraph (ii) and
(2) by adding a new subparagraph (iii):
(iii) a company which issues faceamount certificates as defined in 15 USC
80a-2(a)(15), but only with respect of
such securities.
The parenthetical cite in subparagraph (ii)
is corrected to read “15 USC 78c(a)(12)”
.

17. Effective September 23, 1987, paragraphs
(b) and (c)(1) o f section 221.3 are amend­
ed by adding “ in an amount exceeding
,
$100,000," after “credit secured directly
or indirectly by margin stock".

18. Effective November 13, 1984, section 221.3
o f Regulation U is amended by adding a
new paragraph (I) to read as follows:
(I) Lack o f notice o f NM S security desig­
nation. Failure to treat an NMS security
as a margin stock in connection with an
extension of credit shall not be deemed a
violation of this part if the designation is
made between quarterly publications of
the Board’s list of OTC margin stocks and
the bank does not have actual notice of
the designation.

19. The mandatory effective date fo r compli­
ance with the revised Regulation T is June
30, 1984.
3