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FEDERAL RESERVE BANK
OF NEW YORK
f Circular No. 1632 "1
I January 25,1936 j

AMENDMENT AND SUPPLEMENT TO REGULATION T OF THE
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM.
To Members of National Securities Exchanges,
Brokers and Dealers in Securities, and Banking
Institutions, in the Second Federal Reserve District:

The Board of Governors of the Federal Eeserve System on January 24, 1936,
approved Amendment No. 7 to Begulation T and issued a supplement to such regulation, both effective February 1, 1936. In this connection the Board issued a press
statement reading in part as follows:
The amendment provides that the margin requirements applicable to members of
national security exchanges and brokers or dealers who transact a business in securities
through the medium of such members shall be as prescribed from time to time by the
Board of Governors of the Federal Eeserve System in supplements to the regulation.
The supplement approved today provides that the maximum loan value of registered securities (other than exempted securities) shall be 45% (instead of 55%) of the
current market value of the security in those cases in which this amount is greater
than the lowest market price of the security during the prescribed base period.

The amendment referred to reads as follows:
Amendment No. 7 of Regulation T—Effective February 1, 1936.
Subsections (a), (6) and (c) of section 3 of Regulation T are hereby amended to
read as follows:
" (a) General Rule.—No creditor shall make any initial extension of credit
to any customer on any registered security (other than an exempted security)
for the purpose of purchasing or carrying any security, in an amount which
causes the total credit extended on such registered security to exceed the maximum loan value of such registered security. Except as specifically provided
elsewhere in this regulation, the maximum loan value of a registered security
(other than an exempted security) shall be the maximum loan value which the
Board of Governors of the Federal Reserve System shall prescribe as of general
application under this regulation from time to time in supplements to this
regulation, which will be issued in advance of the date upon which such maximum loan value becomes effective.
" ( 6 ) Extension of credit to other members, brokers and dealers.—In a
special account recorded separately, any creditor may extend credit on any
registered security to any other member, broker or dealer in an amount not
greater than the maximum loan value of such security, which (except in the
case of an exempted security) shall be such special maximum loan value as the
Board of Governors of the Federal Reserve System shall prescribe for the
purposes of this subsection (&) from time to time in supplements to this regulation, which will be issued in advance of the date on which such maximum loan
value becomes effective: Provided, That (1) such other member, broker, or
dealer is subject to the provisions of this regulation or has places of business
only in foreign countries, (2) such credit is extended or maintained solely
for the purpose of enabling such member, broker, or dealer to carry accounts
for his customers other than his partners, and (3) any credit extended or
maintained by such creditor to or for such other member, broker, or dealer for
the purpose of purchasing or carrying securities for his own account or for
the account of his firm or any of his partners shall not be included in such
special account and shall be subject to the other provisions of this section.
" ( c ) Extension of credit to distributors, syndicates, etc.—In a special
account recorded separately, any creditor may extend credit on any regis


tered security to the persons and for the purposes specified below in an amount
not greater than the maximum loan value of such security, which (except in
the case of an exempted security) shall be such special maximum loan value as
the Board of Governors of the Federal Reserve System shall prescribe for the
purposes of this subsection (c) from time to time in supplements to this regulation, which will be issued in advance of the date upon which such maximum
loan value becomes effective: Provided, That such credit is extended:
(1) To any dealer, for the purpose of financing the distribution of an
issue of securities at wholesale or retail; or
(2) To any group, joint account or syndicate, for the purpose of underwriting or distributing an issue of securities."
The supplement referred to reads as follows:

SUPPLEMENT TO REGULATION T
ISSUED BY THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Effective February 1, 1936.
Maximum loan values of registered securities (other than exempted securities)
for purposes of Regulation T.
Pursuant to the provisions of section 7 of the Securities Exchange Act of 1934 and
section 3 of its Regulation T, as amended, the Board of Governors of the Federal Reserve
System hereby prescribes the following maximum loan values of registered securities
(other than exempted securities) for the purposes of Regulation T:
(1) General rule.—Except as provided in paragraphs (2) and (3) of this
supplement, the maximum loan value of a registered security (other than an
exempted security) shall be whichever is the higher of:
(A) 45 percent of the current market value of the security; or
(B) 100 percent of the lowest market value of the security
computed at the lowest market price therefor during the period
of 36 calendar months immediately prior to the first day of the current month, but not more than 75 percent of the current market
value: Provided, That until July 1, 1936, for the purpose of this
regulation, the lowest price at which a security has sold on or after
July 1, 1933, but prior to the first day of the current month, shall be
considered as the lowest market price of such security during the preceding 36 calendar months; and Provided, That the lowest market price
which could be used under the provisions of this regulation during any
calendar month may be used during the first 7 calendar days of the
succeeding calendar month.
(2) Extension of credit to other members, brokers and dealers.—The
maximum loan value of a registered security (other than an exempted security)
in a special account with another member, broker or dealer, which SDecial
account complies with subsection (6) of section 3 of Regulation T, as amended,
shall be 80 percent of the current market value of the security.
(3) Extension of credit to distributors, syndicates, etc.—The maximum
loan value of a registered security (other than an exempted security) in a
special account with a distributor, syndicate, etc., which special account complies with subsection (c) of section 3 of Regulation T, as amended, shall be
80 percent of the current market value of the security.
Additional copies of this circular will be furnished upon request.



\

J. H.

CASE,

Federal Reserve Agent.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102