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federal

Reser ve

ban k

of

Dallas

D ALLAS. TEXAS

November 5, 1963

SUPPLEMENTS TO REGULATIONS T AND U

T o All Banks and Others Concerned
in the Eleventh Federal Reserve District:

The Board o f Governors o f the Federal Reserve System has
amended the supplements to Regulations T and U by increasing margin
requirements from 50 percent to 70 percent, effective November 6, 1963.
The press statement issued today in connection with this action is
quoted b elow :
“ The action covers extensions of credit hy brokers (R egu ­
lation T ) and loans by banks (Regulation U ) for the purpose
o f purchasing or carrying securities registered on a national
securities exchange. Its effect will he to require persons
buying stock on credit to put up a minimum o f 70 per cent
of the price at the time of the transaction.
“ The Board also amended the regulation to increase from
50 to 70 per cent, effective tomorrow, the amount that must
be retained in an undermargined account with a brokerage
firm or bank when there is a sale o f part o f the securities
serving as collateral. An “ undermargined” account or loan is
one in which the customer has an equity amounting to less
than the current margin requirement; e.g., beginning tomor­
row, an equity o f less than 70 per cent. Thus, in the case of
a sale o f part o f the collateral securing such an account or
loan, the amount of the sale proceeds that can be withdrawn
hy the customer will be 30 per cent. Since June 15, 1959, the
amount that could lie withdrawn had been 50 per cent.
“ The Board’s actions were taken pursuant to authority
granted it by Congress in the Securities Exchange Act o f 1934
for the purpose of preventing excessive use o f credit for the
purchase or carrying o f securities.

(OVER)

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

“ Since July 1962, when the margin requirements were
reduced to 50 per cent from the 70 per cent that had pre­
viously prevailed, stock market credit, as reported by brokerage
firms that are members of the New Y ork Stock Exchange and
by weekly reporting banks that are members o f the Federal
Reserve System, has risen by $2.1 billion or 43 per cent. O f the
increase, nearly $1.8 billion was in customer net debits o f the
brokerage firms, which rose 49 per cent.
“ No other changes were made in the regulations.”
A copy o f each o f the amended supplements is enclosed. Member
banks are requested to insert these new supplements in their ring binders
containing the Regulations of the Board o f Governors and the Bulletins
o f this bank.
Yours very truly,
Watrous H . Irons
President

SUPPLEMENT TO REGULATION T
Section 220.8— SUPPLEMENT
I ssued

by the

Board

of

G overnors

of the

F ederal R eserve System

Effective November 6, 1963

(a) M axim u m loa n value f o r gen eral accou n ts.— The maximum
loan value of a registered security (other than an exempted security) in a
general account, subject to § 220.3, shall be 30 percent of its current market
value.
( b ) M argin req u ired f o r sh ort sales in general accou n ts.— The
amount to be included in the adjusted debit balance of a general account,
pursuant to § 220.3 ( d ) (3 ), as margin required for short sales of securities
(other than exempted securities) shall be 70 percent of the current market
value of each such security.
(c) R eten tion req u irem en t f o r gen eral accou n ts.— In the case of
a general account which would have an excess of the adjusted debit balance
of the account over the maximum loan value of the securities in the account
following a withdrawal of cash or securities from the account, the “ retention
requirement” of a registered security (other than an exempted security),
pursuant to § 220.3 ( b ) (2 ), shall be 70 percent of its current market value.

SUPPLEMENT TO REGULATION U
Section 221.4— SUPPLEMENT
I ssued

by tiie

B oard

of

G overnors

of tiie

F ederal R eserve System

Effective November 6, 1963

(а) M axim u m lo a n value o f stock s.— For the purpose of § 221.1,
the maximum loan value of any stock, whether or not registered on a
national securities exchange, shall be 30 percent of its current market
value, as determined by any reasonable method.
(б ) R eten tion req u irem en t.— For the purpose of § 221.1, in the case
of a loan which would exceed the maximum loan value of the collateral
following a withdrawal of collateral, the “ retention requirement” of a stock,
whether or not registered on a national securities exchange, shall be 70
percent of its current market value, as determined by any reasonable
method.