Full text of Federal Reserve Bank of New York Circulars : 5413. Margin Requirements Increased

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FEDERAL RESERVE BANK
OF NEW YORK
P Circular No. 5 4 1 3 "1
L Novem ber 6, 1963 J

MARGIN REQUIREMENTS INCREASED

To All Banlcs, Members o f National Securities Exchanges,
and Others Interested, in the Second Federal Reserve D istrict:

The Board of Governors of the Federal Reserve System issued the following
statement yesterday:

The Board o Governors o t e Federal Reserve System today amended is Regulations T
f
f h
t
and U, r l t n t s o k market c e i , t i c e s margin requirements from 50 t 70 per c n ,
eaig o tc
rdt o n r a e
o
et
e f c i e tomorrow (November 6 1 6 )
fetv
, 93.
The a t o c v r e t n i n o c e i by b o
ci n o e s x e s o s f rdt
r kers (Regulation T) and l a s by banks
on
(Regulation U) f r t e purpose o purchasing o carrying s c r t e r g s e e on a n t o a
o h
f
r
euiis e i t r d
ainl
s c r t e exchange. I s e f c w l be t r q i e persons buying s o k on c e i t put up a
euiis
t fet i l
o eur
tc
rdt o
minimum o 70 per c n o t e p i e a t e time o t e t a s c i n
f
et f h rc t h
f h rnato.
The Board a s amended t e r g l t o s t i c e s from 50 t 70 per c n , e f c i e
lo
h euain o nrae
o
et fetv
tomorrow, t e amount t a must b r t i e i an undermargined account with a brokerage
h
ht
e eand n
f r o bank when t e e i a s l o part o t e s c r t e s r i g a c l a e a . An “underim r
h r s ae f
f h e u i i s e v n s oltrl
margined” account o l i one i which t e customer has an e
r oan s
n
h
quity amounting t l s than
o es
t e current margin requirement; eg,beginning tomorrow, an eq i y o l s than 70 per c n .
h
..
u t f es
et
Thus, i t e c s o a s l o part o t e c l a e a securing such an account o l a , t e amount
n h a e f ae f
f h oltrl
r on h
o t e s l proceeds t a can be withdrawn by t e customer w l be 30 per c n . S n e June 1 ,
f h ae
ht
h
il
et i c
5
1 5 , t e amount t a could b withdrawn had been 50 per c n .
99 h
ht
e
et
The Board’ a t o s were taken pursuant t aut o i y granted i by Congress i t e Securi­
s cin
o hrt
t
n h
t e Exchange Act o 1934 f r t e purpose o preventing e c s i e u e o c e i f r t e purchase
is
f
o h
f
xesv s f rdt o h
o carrying o s c r t e .
r
f euiis
Since July 1 6 , when t e margin requirements were reduced t 50 per c
92
h
o
ent from t e
h
70 per c n t a had p e i
et ht
r v ously p e a l d s o k market c e i , a reported by brokerage f r s
rvie, tc
rdt s
im
t a a e members o t e New York Stock Exchange and by weekly r p rting banks t a a e
ht r
f h
eo
ht r
members o t e Federal Reserve System, has r s n by $ . b l i n o 43 per c n . Of t e
f h
ie
2 1 ilo r
et
h
i c e s , near $ . b l i n was i customer n t d b t o t e brokerage f r s which r s 49 per
nrae
ly 1 8 i l o
n
e eis f h
im,
oe
cn.
et
No o h r changes were made i t e r g l t o s
te
n h euain.
Enclosed are printed copies of Supplements, effective November 6, 1963, to Regula­
tions T and U, giving effect to the margin requirement increases. Additional copies of
the enclosures will be furnished upon request.




A

lfred

H

ayes,

President.

)
SUPPLEMENT TO REGULATION T
Section 220.8—SUPPLEMENT
I ssu e d

by th e

B oard

of

G overnors

of t h e

F e d e r a l R e se r v e S y s t e m

E f c i e November 6 1963
fetv
,
( ) Maximum loan value f r g n
а
o e eral a c u t . The maximum
cons—
l value o a r g s e e s c r t ( t e than an exempted s c r t )
oan
f eitrd euiy ohr
euiy
i a g n r l a c u t s b e t t §2 0 3 s a l be 30 per c n o is
n e e a c o n , u j c o 2., hl
et f t
current market v l e
au.
( ) Margin required f r s o t s l s i gene a a c u t . The
б
o h r ae n
rl cons—
amount t be included i t e adjusted d b t balance o a g n r l
o
n h
ei
f
eea
a c u t pursuant t §220.3(d) ( ) a margin required f r s o t s l s
con,
o
3, s
o h r ae
o s c r t e ( t e than exempted s c r t e ) s a l be 70 per c n o
f euiis o h r
euiis hl
et f
t e current market value o each such s c r t .
h
f
euiy
( ) Retention requirement f r genera a c u t . In t e c s o
c
o
l cons—
h ae f
a g n r l account which would have an e c s o t e adjusted d b t
eea
xes f h
ei
balance o t e account o t e maximum loan value o t e s c r t e
f h
ver h
f h euiis
i t e account fo l w n a withdrawal o cash or s c r t e from t e
n h
loig
f
euiis
h
a c u t t e “r t n i n requirement” o a r g s e e s c r t ( t e
con, h
eeto
f eitrd euiy ohr
than an exempted s c r t ) pursuant t §220.3( ( ) s a l be 70
euiy,
o
6) 2 , h l
per c n o is current market v l e
et f t
au.




PR IN T E D IN N E W YO K E

SUPPLEMENT TO REGULATION U
Section 221.4— SUPPLEMENT
Issu ed b y t h e B o a rd o f G o v e r n o r s o f t h e F e d e r a l R e s e rv e S y stem

E f c i e November 6 1963
fetv
,
(а) Maximum loan value o s o k . For th purpose o § 2 1 1
f tcs—
e
f 2.,
t e maximum loan value o any s o k whether o not r g s e e on a
h
f
tc,
r
eitrd
n t o a s c r t e exchange, s a l be 30 per c n o iscurrent market
a i n l euiis
hl
et f t
v l e a determined by any r a o a l method.
au, s
esnbe

( ) Retention requirement.— For t e purpose o § 2 . , i t e
б
h
f 211 n h
c s o a l which would exceed t e maximum l value o t e
a e f oan
h
oan
f h
c l a e a f l w n a withdrawal o c l a e a , t e ‘ r t n i n r q
o l t r l ol o i g
f o l t r l h ‘ e e t o e uire­
ment” o a s o k whether o not r g s e e on a n t o a s c r t e
f tc,
r
eitrd
a i n l euiis
e
xchange, s a l be 70 per c n o is current market v l e a d t r
hl
et f t
au, s e e ­
mined by any r a o a l method.
esnbe




PRINTED IN NEW YORK