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FEDERAL RESERVE BANK OF N EW YORK r Circular N o. 6054 ~l L O ctober 3 0 ,1 9 6 7 -J Texts of Proposed Changes in Margin Regulations To All Banks, Members of National Securities Exchanges, and Others Interested, in the Second Federal Reserve District: Printed below are excerpts from the Federal Register of October 26, containing the texts of the proposed changes in margin regulations announced in a statement issued by the Board of Governors of the Federal Reserve System on October 20. The Board’s statement was set forth in our Circular No. 6049, which was sent to you on that date. Comments on the proposed changes should be submitted by November 20 and may be sent to the Board of Governors through our Bank Examinations Department. Additional copies of this circular will be furnished upon request. A lfr ed H a y e s, President. FEDERAL RESERVE SYSTEM [1 2 CFR Part 207 ] [Reg. G] LOANS BY PERSONS OTHER THAN BANKS, BROKERS, OR DEALERS Notice of Proposed Rule Making The Board of Governors of the F ed eral Reserve System is considering the adoption of a new P art 207 (R egulation G ), to be issued pursuant to authority contained in the Securities E xchange Act of 1934 (15 U.S.C. 78g), as follow s: Sec. 207.1 207.2 207.3 207.4 207.5 General rule. Definitions. Reports and records. Miscellaneous provisions. Supplement. A uth o rity : The provisions of this Part 207 issued under 15 U.S.C. 78g. § 2 0 7 .1 G e n e r a l r u le . (a) Every person who, in the ordinary course of his business, after October 20, 1967, m akes or arranges for the m aking or m aintenance of any loan for th e pur pose 1 of purchasing or carrying any registered se cu rity 2 (hereinafter called “purpose loan ”) and who is not subject to P art 220 of this chapter (Regulatiorr T) or P art 221 of this chapter (R egu la tion U ) is a “lender” subject to this part. (b) A fter October 20, 1967, no lender shall, (1) m ake or arrange for th e m ak ing or m aintenance of any purpose loan 1 As defined In § 207.2(c). 5 A s defined In § 207.2(d). w hich is secured directly or indirectly,* in whole or in part, by any registered security (other th an an exem pted secu rity)* w ithout first having registered w ith the Board of Governors of the F ed eral Reserve System by filing Federal R eserve Form G - l w ith th e Federal R e serve Bank of the district in w hich th e principal office of the lender is located, or (2) m ake any such loan in an am ount exceeding the m axim um loan value of the collateral, as prescribed from tim e to tim e for registered equity securities in § 207.5 (th e Supplem ent to th is R eg ulation G ) , and as determ ined by th e lender in good fa ith for any collateral other th an registered equity securities: Provided, however, T h at in respect to a loan m ade after October 20, 1967, and before (effective date) such form shall be filed by, and any reduction in the loan or deposit of collateral required to m eet this requirem ent shall be accom plished by (effective d a te ). (d) For th e purpose of th is part, the aggregate of all ou tstan d in g purpose loans to a borrower by a lender shall be considered a single loan; and all the collateral securing such a loan shall be considered in determ ining w hether the loan com plies w ith th is part. (e) No lender shall m ake or m aintain any purpose loan if th e loan is secured directly or indirectly by any registered or exem pted security w hich also serves to secure directly or indirectly any other loan to the borrower, and no lender shall m ake or m ain tain any purpose loan w hich is to be secured by both registered equity securities and any other collateral. (f) (1) E xcept as perm itted in subparagraph (2) of this paragraph, w hile a lender m ain tain s any purpose loan, w henever made, the lender sh all not at any tim e perm it any w ithdraw al or sub stitu tion of collateral unless either (i) the loan would not exceed the m axim um loan value of the collateral after such w ith drawal or substitution, or (ii) the loan is (c) No lender shall make any purpose reduced by at least the am ount by w hich loan to any person who is a creditor sub the m axim um loan value of any collateral ject to P art 220 of this chapter (R egu la deposited is less th an th e “retention re tion T ) except loans on exem pted secu quirem ent” of any collateral w ithdraw n. rities and loans to dealers (as defined in T he retention requirem ent of collateral § 220.2(a) of th is chapter) to aid in the other th an registered equity securities is financing of the distribution of securities the sam e as its m axim um loan value and to custom ers n ot through th e m edium of the retention requirem ent of collateral a nation al securities exchange. W here consisting of registered equity securities th e proceeds of a loan are to be used in is prescribed from tim e to tim e in § 207 5 the ordinary course of business of a (th e Supplem ent to this R egulation G ) . creditor, the loan is presum ed to be for (2) A lender m ay perm it a su b stitu th e purpose of purchasing or carrying tion of registered n on -exem p ted securi registered securities unless th e lender ties effected by a purchase and sale on has in h is records a statem en t signed by orders executed w ithin the sam e day pro th e creditor w hich affirmatively describes vided (i) if the proceeds of the sale e x a different purpose for th e loan. ceed th e total cost of the purchase, the * As defined in § 207.2(1). 4 As defined in § 207.2(e). loan Is reduced by at lea st a n am ount (3) A loan Is for th e purpose o f pura jo in t venture w ith th e borrower w ith equal to th e reten tion requirem ent In ch asin g or carrying a registered security respect to a purpose loan. respect to the sale less th e reten tion re If th e loan is for th e purpose o f purchas (i) A ny arrangem ent as to assets of quirem ent in respect to th e purchase, or in g or carrying a security issued by a u n it th e borrower w hich (1) serves to protect (ii) if th e total cost o f the purchase ex in vestm en t tru st or m an agem en t com th e in terest of th e lender in the loan, (2) ceeds the proceeds of th e sale, th e loan p an y as defined in th e In vestm en t Com serves to m ake assets of th e borrower m ay be increased by an am ount no g rea t p any A ct of 1940, w hose assets custom ar m ore readily available to th e lender th an er th an the m axim um loan value of th e ily include registered securities. to oth er creditors of th e borrower, or (3) securities purchased less th e m axim u m (d) T he term “registered secu rity” under w hich th e borrower surrenders the loan value of th e securities sold. If the m eans any security w h ich (1) is regis righ t to dispose o f assets so long as the m axim um loan value of th e collateral tered on a n a tio n a l securities exchange; loan rem ains outstanding, m akes such securing the loan h as becom e less th an or (2) h a s unlisted trading privilege on a assets indirect “colla tera l” for th e loan. th e am ount of th e loan, th e am ount of n ation al securities exch an ge and is n ot th e loan m ay n on eth eless be increased suspended from trad in g thereon; or § 2 0 7 . 3 R e p o r t s a n d r e c o r d s . if there Is provided additional collateral (3) Is exem pted by th e Securities (a) Every lender who (1) lends in any h avin g m axim um loan value a t least and E xchange C om m ission from th e op one calendar quarter a to tal of tw en tyequal to the am ount of the increase. eration of section 7(c) (2) of th e S ecu ri five thousand dollars ($25,000) or more (g) A loan w hich is secured in w holeties E xchange A ct (15 U.S.C. 78g(c) (2 )) again st collateral w hich includes regis or in part by a registered security is only to th e ex ten t necessary to render tered or exem pted securities, or (2) had presum ed to be for th e purpose of pur law ful any direct or ind irect extension ou tstan d in g at any tim e during th e ca l ch asin g or carrying such security, u n or m ain ten an ce o f credit on such secu endar quarter fifty thousand dollars less th e lender has in his records a sta te rity or any direct or ind irect arran ge ($50,000) or more in loans again st col m en t signed by th e borrower w h ich a f m en t therefor w hich would have been lateral w hich included registered or firm atively describes th e purpose of th e law fu l if such security had been a secu exem pted securities, sh a ll w ith in th irty (30) days follow ing th e end of such loan, and a statem en t signed by th e rity (other th an a n exem pted security) lender th a t he h as exercised reasonable registered on a n ation al securities calendar quarter file a report on Federal Reserve Form G -2 w ith th e Federal d iligen ce in acquainting h im self w ith exchange. th e circum stances surrounding th e loan (e) T he term “exem pted secu rity” in Reserve Bank of th e district in w hich and has no inform ation w h ich w ould put cludes securities w hich are direct obliga th e principal office of th e lender Is a prudent m an upon inquiry and if in tion s of or obligations guaranteed as to located. (b) Every lender sh all m ain tain such vestigated w ith reasonable diligence principal or in terest by th e U nited S tates; w ould lead to the discovery of th e fa lsity such securities issued or guaranteed by records as shall be prescribed by th e o f th e borrower’s sta tem en t. C ircum corporations in w h ich th e U n ited S ta tes Board of G overnors of th e Federal R e stan ces w hich would in d icate th a t the h a s a direct or indirect in terest as sh all serve System to enable it to perform lender h as n ot exercised reasonable d ili be designated for exem p tion by th e S ec the fu n ction s conferred upon it by the gence in so acqu ain tin g h im self and so retary o f the T reasury as necessary or Securities E xchange Act. investigatin g w ould include, but are n ot appropriate in th e public in terest or for § 2 0 7 . 4 M i s c e l l a n e o u s p r o v i s i o n s . lim ited to, fa cts such as th a t (1) th e th e protection of investors; securities (a) In determ ining w hether a security proceeds of the loan were paid to a broker w hich are direct obligations of or obliga or to a bank again st delivery of registered tions guaranteed as to principal or is a registered security or a security of securities, (2) there were frequent sub in terest by a S tate or any p olitical subdi th e kind described in § 207.2(c) (3 ), a stitu tion s of registered securities serv vision thereof or any agency or instru lender m ay rely upon th e la test list of ing as collateral for th e loan, or (3) th e m en tality of a S ta te or any political such securities issued by th e Board of am ount and term s of th e loan were d is subdivision thereof or any m unicipal cor Governors of the Federal Reserve System . Copies m ay be obtained from th e Board proportionate to the stated purpose. porate in strum entality o f one or more or from any Federal R eserve Bank. S tates; and such other securities (which § 2 0 7 .2 D e fin itio n s . (b) T h e renew al or exten sion of m a m ay include, am ong others, unregistered For th e purposes of th is part, unless securities, th e m arket in w hich is pre tu rity of a loan need n ot be treated as th e m aking of a loan if the am ount of the th e con text otherw ise req u ires: dom inantly in trastate) as th e Securities (a) T he term “p erson ” m ean s an in and E xchange C om m ission m ay exem pt loan Is n ot increased except by the ad dividual, a corporation, a partnership, an pursuant to th e S ecurities E xchange Act d ition of in terest or service Qharges on th e loan or of taxes on transactions in association, a join t stock com pany, a (15 U.S.C. 78) as am ended. con n ection w ith th e loan. trust, or an unincorporated organization. (f) T he term “equity secu rity” m eans (c) N othing in th is part shall be con (b) T he term “in th e ordinary course any stock or sim ilar security; or any to prohibit w ithdraw al or of his business” m ean s occurring or rea secu rity convertible, w ith or w ithout con strued sonably expected to occur in th e course of sideration, into such a security; or carry su b stitu tion o f securities to enable a any activity of the lender for livelihood in g any w arrant or righ t to subscribe to borrower to participate in a reorganiza tion. or profit or the m an agem en t and p res or purchase such a security; or any such (d) Failure to com ply w ith this part ervation of property or in addition, in w arrant or right; or any other security th e case of a lender other th an an in w h ich th e Securities and E xchange Com due to a m istake m ade in good fa ith in dividual, carrying out or in fu rth eran ce m ission shall deem to be o f sim ilar n a determ ining, recording, or calculating o f a purpose for w h ich the lender w as ture and consider necessary or appropri any loan, balance, m arket price, or loan value, or other sim ilar m atter, sh all not form ed. ate, by such rules and regulations as it con stitu te a violation of this part if (c) (1) Substance, rather th a n form , m ay prescribe in th e public Interest or prom ptly after discovery of th e m istake determ ines w hether a lo a n is for th e for th e protection o f investors, pursuant th e lender takes w hatever action is “purpose”, w hether im m ediate, in cid en to section 3 (a ) (11) o f th e Securities E x practicable to rem edy th e noncom pli tal, or ultim ate, of purchasing or carry ch an ge A ct (15 U.S.C. 7 8 c ( a ) (11)) to ance. in g registered securities. If th e loan Is treat as an equity security. (e) No lender sh all perform any serv m ade for such purpose, it is a purpose (g) ( 1 ) The term “p u rch ase” includes ices in respect to a loan w hich is secured loan despite any tem porary ap p lication any contract to buy, purchase, or other d irectly or indirectly by any registered o f the funds otherwise. w ise acquire. security unless such loan is m ade and (2) A loan is for the purpose of “carry (2) T he term “sa le” includes any con m ain tain ed in conform ity w ith th e pro in g ” a security registered on a n a tio n a l tract to sell or otherw ise dispose of. visions of this part. securities exchange if the purpose of the (f) A lender m ay arrange for th e e x (h) T he term “borrower” includes a loan is to enable th e borrower to reduce ten sion or m ain ten an ce of credit by any or retire indebtedness w h ich w as borrower and any other person to whom person upon th e sam e term s and condi originally incurred to purchase such a a loan is m ade for the use of th e borrower, tions as th ose upon w hich th e lender, security. and also includes any person engaged In under th e provisions of th is part, m ay him self extend or m ain ta in such credit, but only upon such term s and conditions, except th a t th is lim itation sh all n o t ap ply w ith respect to the arranging by a lender for a bank subject to P art 221 of this chapter (R egulation U ) to extend or m ain tain credit on registered securi ties or exem pted securities. § 2 0 7 .5 S u p p le m e n t. (a) M axim um loan value of registered equity securities. For th e purpose of § 207.1, the m axim um loan value of any registered equity security shall be 30 percent of its current m arket value, as determ ined by any reasonable m ethod. (b) R etention requirement. For th e purpose of § 207.1, in th e case of a loan w hich would exceed the m axim um loan value of the collateral follow ing a w ith draw al of collateral, th e “reten tion re quirem ent” of a registered equity security shall be 70 percent of its current m arket value, as determ ined by any reasonble m ethod. T he purpose of the proposed regu la tion is to bring lenders other th a n banks, brokers, or dealers w ith in th e coverage of the B oard’s rules governing m argin re quirem ents on securities transactions. A vailable ind ications suggest th a t e x cessive credit m ay flow in to th e secu rities m arkets from such lenders. T he proposed regulation is designed to apply to any loan by any “p erson” th a t is m ade in the ordinary course o f such person’s business (1) if the collateral for th e loan includes any registered security and (2) if the purpose o f th e loan is to purchase or carry any registered security (referred to as a “purpose loan ” ). T he regulation would presum e th a t a loan secured by registered securities w as m ade for th e purpose of purchasing or carry ing those securities, unless th e lender could dem onstrate the contrary. T h e term “person” would be defined to include, for exam ple, partnerships, ta x exem pt organizations, and corporations, and a' loan w ould be considered to be m ade/in the ordinary course of a person’s business if it was an even t occurring or reasonably expected to occur in th e course o f any profit-m akin g activity, or th e m anagem ent- and preservation of prop erty, or in th e case of a lender other th a n an individual, carrying out an objective for w hich th e lender was form ed. A loan by a corporation out of working capital, for exam ple, or m ade to a key executive to enable him to exercise a stock option, w ould be subject to th e regulation if co l lateral for the loan included any regis tered security. B ecause o f th e lack of com prehensive inform ation about lenders who would be subject to th e proposed regulation, no lender would be perm itted, at least until appropriate inform ation and en force m en t techniques had been developed, to m ake both “purpose” and “non -p u rp ose” loans, or purpose loans secured by both equity and nonequity securities, to the sam e borrower. However, lenders could m ake nonpurpose loans, or loans w hose collateral did not include any equity securities (a term w hich, as explained above, w ould Include any security c o n vertible in to an equity se c u r ity ), w ith ou t regard to in itia l m argin requirem ents. In addition, lenders would be forbidden to m ake loan s to brokers or dealers ex cep t for loans on exem pted securities and loans to dealers to aid in th e financing o f distributions off th e exchange. In stan ces of loans by nonbank sources, m ade on an unsecured basis to creditors subject to R egulation T, have been re ported in th e press. The Board considers th a t such loans constitute a p oten tial source o f excessive credit in th a t they are in h eren tly unstable, and if called in large num bers a t or about th e sam e tim e, m ig h t contribute to a m arket decline. Except as stated above, sam e-d ay sub stitu tion s o f equity collateral, or o f n on security collateral, securing a regulated loan by a R egulation G lender, would be perm itted to th e same exten t as under R egu lation U. R egulation G w ould also con tain reten tion and w ithdraw al re striction s on underm argined accounts com parable to those in T and U. Under R egulation G, any lender who after today m akes any loan th a t would be subject to th e regulation would, if th e regulation is adopted, have to file a registration statem en t w ith th e Federal R eserve B ank in whose d istrict th e len d er’s head office is located. T h is sta te m en t w ould have to be filed by th e effec tive date of th e regulation, 30 days after adoption. A form for th e registration sta tem en t would be prom ulgated a t th e tim e o f adoption. Lenders would also be required to file periodic reports and keep their records in such a way th a t exam iners could verify th e accuracy of th e registration statem en t and th e periodic reports. In general, R egulation G w ould place lenders who were subject to it on an equal footin g w ith other regulated lenders as to such m atters as renew als and exten sion s of loans, perm itting w ith draw als or substitutions of collateral to enable borrowers to participate in re organizations, and th e correction of certain bookkeeping errors. However, th e regulation would not perm it th e transfer o f regulated loans betw een one lender and another, or one borrower and another, nor would it provide special term s for subscription loans-. It is believed th a t m ost lenders would have little oc casion to m ake use of such provisions, and th a t the recordkeeping and reporting problem s of lenders would be unduly com plicated if such provisions were in cluded in th e regulation. Foreign lenders m aking loan s th a t are used to purchase or carry securities in th is country would be subject to R egu la tion G. In m ost such cases, as w ell as in m any instances involving dom estic lenders subject to the regulation, a reli able agency in this country, usually but not alw ays a bank, m ust be em ployed to hold the collateral for th e loan, effect substitutions, collect interest, and oth er w ise represent the interest of th e lender. Accordingly, a lender would be prohibited from perform ing any services in respect to a loan th a t was secured directly or indirectly by any registered security u n less th e loan was m ade and m ain tain ed in conform ity w ith th e requirem ents o f th e r e g u la tio n . (A corresponding pro vision is proposed for in sertion into R egu lation U; R egulation T already fo r bids brokers or dealers to perform such services.) T his notice is published pursuant to section 553(b) of title 5, U n ited S tates Code, and § 262.2(a) o f th e rules of procedure of th e Board of Governors of th e F ederal Reserve System (12 CFR 2 6 2 .2 (a )). To aid in th e consideration of th is m atter by the Board, in terested persons are invited to subm it, in w riting, relevant data, views, or argum ents. Such m aterial should be sen t to th e Secretary, Board of Governors of th e F ederal R eserve System , W ashington, D.C. 20551, to be received not later th a n N ovem ber 20, 1967. Under th e B oard’s rules regarding availab ility of in form ation (12 CFR 261), such m aterials w ill be m ade available for inspection and copying to any person upon request unless th e person subm it ting th e m aterial requests th a t it be con sidered confidential. D ated at W ashington, D.C., th is 20th day of October 1967. B y order o f th e Board o f Governors. [ seal] M e r r it t S herman, Secretary. [F.R. Doc. 67-12620; Filed, Oct. 25, 8:45 a.m.] 1967; [1 2 CFR Part 220 ] [B e g . T ] CREDIT BY BROKERS, DEALERS, AND MEMBERS OF NATIONAL SECURI TIES EXCHANGES Notice of Proposed Rule Making T he Board of G overnors is considering am ending P art 220 in th e follow ing re spects : 1. S ection 220.2(a) would be am ended and a new paragraph (f) w ould be added to read as follows: § 2 2 0 .2 D e fin it io n s . * * * * * (a) T he term s “person”, “m em ber”, “broker”, “d ealer”, “buy”, “p u rch ase”, “sa le ”, “sell”, “secu rity”, “equity secu r ity ”, and “bank” have th e m eanings given them in section 3 (a) of th e A ct (15 U.S.C. 7 8 c (a )). * * * * * (f) T he term “n onequity secu rity” m eans any security other th a n an equity security or an exem pted security. 2. Section 220.3 (a ), (b ), (c ), (e ), and (f) would be am ended to read as fo l lows: § 2 2 0 .3 G e n e ra l a cc o u n ts. (a) Contents of general account. All fin an cial relation s betw een a creditor and a custom er, w hether recorded in one record or in more th a n one record, shall be included in and be deem ed to be parts of th e cu stom er’s general accou nt w ith th e creditor, excep t th a t th e relations w h ich § 220.4 perm its to be included in any special accou n t provided for by th a t th e short sale) of registered equity se sale, as th e case m ay be, and at any section m ay be included in th e appropri curities in the account, there m ay be oth er tim e sh a ll use th e closing sale ate special account, an d all transactions w ithdraw n in cash an am ount equal to price o f th e security on the preceding in com m odities, and, excep t to th e ex th e difference betw een th e current m ar business day as show n by any regularly ten t provided in paragraph (b) (2) of ket value of th e securities sold and th e published reporting or quotation service. th is section, all tran saction s in n o n “retention requirem ent” o f those securi In th e absence of any such closing sale equity securities, exem pted securities, ties, or (v) upon th e sale (other th an price, th e creditor m ay use any reason and in other securities h a vin g no loan the short sale) or a registered nonequity able estim ate of th e m arket value of such value in a general accou n t under th e pro security or an exem pted security th a t security as o f th e close of business on visions o f paragraph (c) o f th is section w as held in th e accou n t on (effective such preceding business day. and § 220.8 (except unissued securities, date) there m ay be w ithdraw n in cash an * * * * * sh ort sales, and p urchases to cover short am ount equal to th e difference between (e) Liquidation in lieu o f deposit. In sales) sh all be included in th e appropri th e current m arket value of th e securities ate special accou n t provided for by sold and th e “reten tion requirem ent” or any case in w hich th e deposit required § 220.4. D uring any period w hen § 220.8 th ose securities. T he “reten tion require by paragraph (b) of th is section, or any specifies th a t registered equity securities m e n t” o f an exem pted security held in portion thereof, is n ot obtained by the sh all have no loan value in a general a c th e account on (effective date) is the creditor w ith in th e 5-day period sp eci count, any tran saction con sistin g o f a sam e as its m axim um loan value as d e fied therein, registered nonexem pted purchase of a security other th an a p ur term ined by th e creditor in good faith , securities sh all be sold (or, to the exten t chase of a security to reduce or close and the “retention requirem ent” of a th a t th ere are insufficient registered out a short position sh all be effected in registered nonequity security held in the nonexem pted securities in the account, the special cash account provided for account on (effective date) and of a reg other liquidating transactions shall be by § 220.4(c) or in som e other appropri istered equity security are prescribed effected in th e a c c o u n t), prior to the ate special accou n t provided for by from tim e to tim e in § 220.8(c) (the sup expiration o f such 5-day period, in such am ount th a t th e resulting decrease in plem ent to this R egu lation T ) . § 220.4. R ules for com puting th e m a x ith e adjusted debit balance of th e account (b) General rule. (1) A creditor shall (3) exceeds, by an am ount a t least as great n o t effect for or w ith an y custom er in a m um loan value of th e securities in a as such required deposit or th e u nde general account and th e adjusted debit general account any tran saction w hich posited portion thereof, th e “retention in com bination w ith th e other tra n s balance of such an account are provided requirem ent” o f any registered or In paragraphs (c) and (d) o f th is se c action s effected in th e account on th e exem pted securities sold. sam e day, creates an excess o f th e ad tion, and certain m odifications of and (f) Extensions of time. In exceptional exceptions to th e general rule stated in ju sted debit balance of th e account over cases, th e 5-d ay period specified in para th is paragraph are provided in th e sub th e m axim um loan value of th e securi graph (b) of th is section may, on appli ties in th e account, or increases any such sequent paragraphs of th is section and cation of th e creditor, be extended for excess, unless in con n ection therew ith in § 220.6. one or m ore lim ited periods com m ensu (c) M axim um loan value and current th e creditor obtains, as prom ptly as p o s rate w ith th e circum stances by any regu sible and in any event before th e exp ira m arket value. (1) T he m axim um loan larly con stitu ted com m ittee of a national tion of 5 full business days follow ing th e value of the securities in a general securities exch an ge h aving jurisdiction date of such transaction, th e deposit in to accou n t is the sum o f th e m axim um loan over th e business conduct o f its m em th e account of cash or securities in su ch values of th e individual securities in th e bers, o f w hich exch an ge th e creditor is a am ount th a t th e cash deposited plus th e accou n t, including securities (other m em ber or through w hich h is tran sac m axim um loan value of th e securities th a n unissued securities) bought for the tion s are effected, provided such com deposited equals or exceeds the excess accou n t but not y et debited thereto, but m ittee is satisfied th a t th e creditor is excluding securities sold for th e account actin g in good fa ith in m aking th e appli so created or th e increase so caused. (2) E xcept as perm itted in th is su b -w h eth er or n o t p aym en t h as been cation and th a t th e circum stances are paragraph, no w ithdraw al of cash or reg credited thereto. in fa ct exceptional and w arrant such (2) E xcept as otherw ise provided in action. istered or exem pted securities sh a ll be perm issible if the adjusted debit b alan ce th is paragraph, th e m axim um loan value f * * * * of the account would exceed th e m a x i of a security in a general account shall 3. S ection 220.4(h) would be am ended m um loan value o f th e securities in th e be such m axim um loan value as the accou n t after such w ithdraw al. T he e x Board sh all prescribe for general and a new paragraph (i) would be added to read as follow s: ceptions are available only in th e even t accounts from tim e to tim e in § 220.8. no cash or securities need to be deposited No collateral oth er th a n an exem pted § 2 2 0 . 4 S p e c i a l a c c o u n t s . In the account in con n ection w ith a security or a registered nonequity se * * * * * tran saction on a previous day and none curity held In th e accou n t on (effective (h) Special subscriptions account. In a date) and a registered equity security, w ould need to be deposited th erea fter in special subscriptions account a creditor con nection w ith any w ithdraw al of ca sh sh all have any loan value in a general m ay effect and finance th e acquisition of account. or securities on th e current day. T he per a registered security for a custom er m issible exceptions are (i) registered (3) A w arrant or certificate w hich through th e exercise o f a right to acquire nonequity or exem pted securities held evidences only a righ t to subscribe to or such security w hich is evidenced by a in th e account on (effective d ate) m ay otherw ise acquire any security and which w arrant or certificate issued to stock be w ithdraw n upon th e deposit in th e expires w ithin n in ety days of issuance holders and expiring w ithin 90 days of account o f cash (or registered equity sh a ll have no loan value in a general issuance, and such special subscriptions securities counted at their m axim um loan account; but, if th e accou n t contains th e account shall be subject to the sam e con value) at least equal to th e “reten tion re security to the holder o f w hich such w ar ditions to w hich it would be subject if it quirem ent” of such w ithdraw n securities, ran t or certificate h a s been issued and were a general account except th at: or (ii) registered equity securities m ay such w arrant or certificate is held in the (1) E ach such acquisition shall be be w ithdraw n upon the deposit in the appropriate account under § 220.4, th e accou nt of cash (or registered equity current m arket value of such security treated separately in th e account, and prior to in itia tin g th e transaction the account of cash (or registered equity se (if such security be a registered secur curities counted at their m axim um loan ity ) sh all, for the purpose o f calculating creditor sh all obtain a deposit o f cash value) at least equal to th e “retention its m axim um loan value, be increased by in th e accou n t such th a t the cash de requirem ent” of those securities, or (iii) th e current m arket value o f such posited plus th e m axim um loan value of th e securities so acquired equals or e x cash m ay be w ithdraw n upon th e deposit w arrant or certificate. ceeds th e subscription price, giving effect In th e account o f registered equity se (4) For th e current m arket value o f curities having a m ixim um loan value a t a security throughout th e day of its to a m inim um loan value for th e securi ties so acquired of 75 percent o f their lea st equal to the am ount of ca sh w ith purchase or sale, th e creditor sh all use current m arket value as determ ined by drawn, or (iv) upon th e sale (other th a n its to tal cost or th e n et proceeds o f its an y reasonable m ethod; (c) R etention requirement for general (2) A fter October 20, 1967, at the tim e w hen a loan Is m ade pursuant to th is accounts. In th e case o f a general ac paragraph, the creditor sh all com pute cou n t w hich would have an excess of th e the am ount by w h ich th e loan exceeds adjusted debit balance of th e accou n t the m axim um loan value o f th e collateral over th e m axim um loan value o f th e se as prescribed by § 220.8 an d th e custom er curities in th e account follow ing a w ith shall reduce the loan by an am ount equal drawal of cash or securities from th e a c to on e-fou rth o f such sum by th e end count, pursuant to § 220.3(b) (2 ), th e “re of each of the four succeeding 3 -ca len - ten tio n requirem ent” of an exem pted dar-m on th periods or u n til th e loan is security held in th e account on (effective equal to such m axim um loan value, date) sh all be equal to its m axim um loan w hichever shall occur first, and, if th e value as determ ined by th e creditor in creditor fails to obtain th e required re good fa ith , and th e “reten tion require duction w ith respect to a particular a c m e n t” of a registered nonequity security quisition w ith in 5 full business days a f held in th e account on (effective date) ter the reduction is due, th e creditor sh all and of a registered equity security sh all prom ptly sell th e collateral so acquired: be 70 percent of the current m arket value of th e security. Provided, T hat, as to loans m ade betw een October 20, 1967, and (effective d a te ), (d) Securities having no loan value such four succeeding periods sh all begin in general account. No security oth er on (effective d a t e ) ; and th a n an exem pted security or a regis (3) T he creditor sh all not perm it any tered nonequity security held in th e a c w ithdraw al o f cash or securities from the cou n t on (effective date) and a regis account so long as there is a debit b a l tered equity security, shall have any loan ance in the account, except th a t w hen value in a general account. th e debit connected w ith a given acquisi A principal purpose of these am en d tion of securities in th e a ccou n t h a s b e m en ts is to change certain provisions com e equal to or less th a n th e m axim um through w hich excessive credit m ay be loan value of such securities as prescribed flowing in to th e securities m arkets. T he for general accounts (or in con n ection ch an ges th a t would be m ade to accom w ith an acquisition after O ctober 20, plish th is purpose are described in th e 1967, the requirem ents o f subparagraph accom panying notice of proposed rule (2) o f th is paragraph have been fu l m aking w ith respect to am endm ents to filled ), such securities m ay be tra n s R egu lation U. ferred to th e general account together A nother purpose of these am endm ents w ith any rem aining portion o f such is to give creditors subject to R egulation debit. T 5 fu ll business days in w h ich to ob In order to facilitate th e exercise o f a ta in any additional deposit o f m argin righ t in accordance w ith th e provisions required in connection w ith tran saction s of th is paragraph, a creditor m ay perm it in a general account. T his is 1 day m ore th e right to be transferred from a general th a n th e four presently perm itted under account to th e special subscriptions a c th e regulation. Such ch an ge appears d e count w ithout regard to any oth er re sirable in order to relieve th e pressure on bookkeeping departm ents o f broker quirem ent of th is part. (i) Special bond account. In a special age firm s by ensuring th a t a w eekend will bond accoun t a creditor m ay effect and alw ays be included in th e period o f tim e finance transactions in exem pted securi w ith in w h ich th e required deposit m u st ties and registered nonequity securities be obtained. T h is n otice is published pu rsu an t to for any custom er. section 553(b) of title 5, U n ited S ta tes 4. Section 220.8 (the supplem ent to Code, and § 262.2(a) of th e rules o f pro R egulation T ) w ould be am ended to read cedure of th e Board of Governors o f th e as fo llo w s: F ederal Reserve System (12 CFR 262.2 (a )). § 2 2 0 .8 S u p p le m e n t. To aid in th e consideration o f th is (a) M axim um loan value for general m atter by th e Board, in terested persons accounts. T he m axim um loan value o f are invited to subm it, in w riting,.relevant securities in a general account subject data, views, or arguments. S u ch m aterial to § 220.3 sh all be should be sen t to the Secretary, Board (1) O f a registered nonequity security o f G overnors of th e Federal R eserve S y s held in th e account on (effective date) tem , W ashington, D.C. 20551, to be re and of a registered equity security, 30 ceived n ot later th an November 20, 1967. percent o f the current m ai’ket value of Under th e B oard’s rules regarding av a il ability o f inform ation (12 CFR 261), the security and (2) O f an exem pted security h eld in such m aterials will be m ade available for the account on (effective date) th e m a x i in sp ection and copying to any person m um loan value o f the security as deter upon request unless the person su b m it tin g th e m aterial requests th a t it be con m ined by the creditor in good fa ith . (b) Margin required for short sales in sidered confidential. D ated a t W ashington, D.C., th is 20th general accounts. T he am ount to be in cluded in th e adjusted debit balance of day of October 1967. a general account, pursuant to § 220.3 (d) (3 ), as m argin required for sh ort sales of securities (other th a n exem pted securities) shall be 70 percent of th e cur rent m arket value o f each such security. By order of th e Board o f Governors. [ seal] M erritt S h e r m a n , Secretary. [F.R. Doc. 67-12621; Piled, Oct. 25, 1967; 8:45 a.m.] [1 2 CFR Part 221 ] [Reg. U] LOANS BY BANKS FOR PURPOSE OF PURCHASING OR CARRYING REG ISTERED STOCKS Notice of Proposed Rule Making T he Board o f G overnors is considering am ending P art 221 in th e follow ing re spects: 1. S ection 221.1 w ould be am ended to read as follow s: § 2 2 1 .1 G e n e r a l r u le . (a) No bank sh all exten d any c r e d it1 secured d irectly or in d irectly by any s to c k 2 for th e purpose of purchasing or carrying an y stock registered on a n a tion al securities e x c h a n g e 3 (and no bank sh all m ake an y loan described in § 221.3 (q) regardless of w h eth er or n ot su ch loan is secured by an y stock) in an am ount exceeding th e m axim um loan value of th e collateral, as prescribed from tim e to tim e for stocks in § 221.4 (th e Supplem ent to th is R egu lation U ) and as determ ined by th e bank in good fa ith for any collateral other th a n stocks: P ro vided, A ny collateral oth er th an stock sh a ll have loan value only as collateral for a loan described in § 221.3 (s ), and n o t for any other loan subject to th is part unless held as collateral for such loan on October 20, 1967, and co n tin u ously th ereafter. (b) E xcept as perm itted in paragraph (c) o f th is section, w h ile a bank m ain ta in s an y loan subject to th is part, w henever m ade, th e bank sh all n o t at any tim e perm it any w ithdraw al or sub stitu tio n of collateral unless either (1) th e loan would n ot exceed th e m axim um loan value of th e collateral after such w ithdraw al or sub stitu tion , or (2) th e loan is reduced by a t lea st th e am ount by w h ich th e m axim um loan value of an y collateral deposited is less th an the “reten tion requirem ent” o f any col lateral w ithdraw n. T h e “reten tion re quirem ent” of collateral oth er th a n stock is th e sam e as its m axim um loan value and th e “reten tion requirem ent” o f col lateral consisting of stock is prescribed from tim e to tim e in § 221.4 (th e Sup plem ent to th is R egu lation U ). (c) A bank m ay perm it a substitution of registered nonexem pted stock effected by a purchase and sale on orders ex e cuted w ith in th e sam e day provided (1) if th e proceeds of th e sale exceed the to ta l cost of th e purchase, th e loan is reduced by at least an am ou n t equal to th e “reten tion requirem ent” w ith respect to th e sale less th e “reten tion require m e n t” w ith respect to th e purchase, or (2) if th e to tal cost of th e purchase exceeds th e proceeds o f th e sale, th e loan m ay be increased by an am ount no greater th an th e m axim um loan value of th e stock purchased less th e m axim um loan value o f th e stock sold. If th e m axi 1 A “ credit” is sometimes referred to here inafter as a “loan” . 3 As defined in § 221.3(1). 8 Commonly referred to as a "purpose loan” . See §§ 221.3(b) (2) and (3) and (1). m um loan value o f th e collateral secur o f th e Federal R eserve System . A bank tered w hich is acquired by the borrower ing th e loan h as becom e less th an th e m ay also rely upon su ch a record to through th e conversion or exchange of am ount of th e loan, th e am ount of th e determ ine w hether a stock into w hich th e security pursuant to its term s, the loan m ay n on eth eless be increased if a security is convertible is a stock regis loan sh all thereupon be deem ed to be for th ere is provided add ition al collateral tered on a n ation al securities exchange. th e purpose of purchasing or carrying a having m axim um loan value a t least * * * * * stock so registered. In any such case, th e equal to the am ount o f th e increase. (1) T he term “stock ” includes any am ount o f th e ou tstan d in g loan, or such (d) For the purpose o f th is part, ex security com m only know n as a stock, am ou n t plus any increase therein to e n cept for a loan subject to § 221.3 (s ), the any voting trust certificate or other able th e borrower to acquire the stock entire indebtedness o f any borrower to in stru m en t representing such a secu so registered, sh all n ot be perm itted on any bank incurred a t any tim e for th e rity, any security convertible into such th e date such stock is substituted as co l purpose o f purchasing or carrying stocks security, certificate, or other instrum ent, la tera l to exceed th e m axim um loan registered on a nation al securities e x and any w arrant or righ t to subscribe value of th e collateral for the loan on such date, and th ereafter such indebted ch an ge shall be considered a single loan; to or purchase such a security. n ess shall be treated as subject to § 221.1: and all the collateral securing such in * * * * * Provided, however, T h a t any reduction debtedness sh all be considered in deter (p) A loan need n o t com ply w ith th e in th e loan or deposit o f collateral re m inin g w hether or n o t th e loan com o th er requirem ents of th is part if it is quired on th a t date to m eet this require plies w ith th is part. to enable the borrower to acquire a stock m en t m ay be brought about w ithin 30 § 2 2 1 .2 [A m e n d e d ] by exercising a righ t to acquire such days o f such substitution. 2. S ection 221.2 would be am ended by stock w hich is evidenced by a w arrant or (2) If, after October 20, 1967, but prior (1) elim in atin g th e paragraph enum er . certificate issued to stockholders and e x to (effective d a te ), a loan is m ade by a ated ( b ) ; (2) redesignating paragraphs piring w ith in 90 days o f issuance: Pro bank for th e purpose of purchasing or (c ), (d ), (e ) , ( f ) , (g ), (h ), ( i) , (j ), and vided, T h at (1) each such acquisition u n carrying a “security convertible into a (k) as paragraphs ( b ) , (c ), (d ), (e ), der th is paragraph shall be treated sep stock registered on a n a tio n al securities ( f ) , (g ), (h ), ( i) , and (j ) , respectively; arately, and th e loan w hen m ade shall ex ch a n g e”, the am ount of the ou tstan d and (3) am ending th e second proviso in n o t exceed 75 percent o f th e current ing loan sh a ll n ot be perm itted on (effec redesignated paragraphs (e ), (f ), and m arket value of th e stock so acquired as tive date) to exceed the m axim um loan (g) to read: “ A nd provided further, T h at determ ined by any reasonable m ethod, value o f th e collateral for th e loan on it is either (1) m ade to a broker or (2) after October 20, 1967, a t th e tim e a such date: Provided, however, T h at any dealer, or (2) m ade for a purpose other loan is m ade pursuant to th is paragraph, reduction in th e loan or deposit of co l th a n to enable th e borrower to pay for th e bank sh all com pute th e am ou n t by lateral required to m eet th is requirem ent stock purchased in an account subject w hich th e loan exceeds th e m axim um m ay be brought about w ith in 30 days of loan value of th e collateral as prescribed (effective d a te ). to P art 220 o f th is ch ap ter.” 3. S ection 221.3 (b ), (c ), (1), (p ), and by § 221.4 and th e borrower sh a ll reduce (s) A bank m ay m ake a loan for the (r) w ould be am ended and new para th e loan by an am ou n t equal to on e- purpose o f purchasing or carrying a fou rth of such sum by th e end o f each of graphs ( s ) , ( t ) , and (u) would be added th e four succeeding 3 -calen d ar-m on th stock registered on a nation al securities to read as follow s: periods or u n til the loan is equal to the exchange secured by collateral other th an § 2 2 1 .3 M is c e lla n e o u s p r o v is io n s . m axim um loan value o f th e stock, w h ich stock, and, in th e case of such a loan, * * * * * ever shall occur first, and if th e borrower th e m axim um loan value of th e collateral sh a ll be as determ ined by th e bank in (b )(1 ) No loan, how ever it m ay be sh a ll fa il to m ake th e required reduction good fa ith . secured, need be treated as a lo a n for w ith respect to a particular acquisition (t) No bank sh all perform any serv th e purpose o f “carrying” a stock regis w ith in 5 full business days after such tered on a national securities exch an ge paym en t is due, th e bank sh all prom ptly ices in respect to a loan w hich is for the unless th e loan is as described in th is sell th e collateral so acq u ired : Provided, purpose of purchasing or- carrying a paragraph or th e purpose o f th e loan T hat, as to loans m ade betw een October stock registered on a n a tio n al securities is to enable th e borrower to reduce or 20, 1967, and (effective d ate) such four exch an ge and is secured by any stock u n retire indebtedness w h ich w as originally succeeding periods sh all begin on (effec less such loan is m ade and m aintained in incurred to purchase su ch a stock, or, tive d a te), and (3) w hile th e borrower conform ity w ith th e provisions of P art if h e be a broker or a dealer, to carry h a s any loan ou tstan d in g a t th e bank 207, 220, or th is 221 of th is chapter (R eg under th is paragraph no w ithdraw al or ulation G, T, or U ) . such stocks for custom ers. (u) No bank sh a ll arrange for the e x (2) A loan for th e purpose of pur su b stitu tion of stock used to m ake such ch asin g or carrying a “reedeem able secu loan sh all be perm issible, except th a t ten sion or m ain ten an ce of any credit for rity” (i.e., a redeem able proportionate w hen th e loan h a s becom e equal to or th e purpose of purchasing or carrying in terest in the issuer’s assets) issued by less th a n the m axim um loan value o f th e any stock registered on a n ational securi an “open-end com pany,” as defined in stock as prescribed for § 221.1 in § 221.4 ties exchange, except upon the sam e th e In vestm en t Com pany A ct of 1940, (or w ith respect to a loan m ade a fter term s and conditions on w hich th e bank w hose assets custom arily include stocks O ctober 20,1967, th e requirem ents of th e itse lf could extend or m ain tain such registered on a n atio n a l securities e x preceding clause have been fulfilled) th e credit under th e provisions of this part. ch an ge, sh all be deem ed to be for th e stock an d indebtedness m ay th ereafter A principal purpose of th ese am end purpose of purchasing or carrying a be treated as subject to § 221.1 instead of m ents is to change certain provisions th is paragraph. In order to fa cilita te the through w hich excessive credit m ay be stock so registered. exercise o f a right under th is paragraph, flowing in to th e securities m arkets. The (3) A loan m ade after O ctober 20, a bank m ay perm it th e righ t to be w ith ch an ges relate principally to th e follow 1967, for th e purpose of purchasing or drawn from a loan subject to § 221.1 ing: carrying a “security convertible in to a w ith ou t regard to any oth er requirem ent stock registered on a n ation al securities (1) Special subscription accounts. U n exch an ge” sh all be deem ed to be for th e o f th is part. der th e current m argin regulations, sp e * * * * * purpose of purchasing or carrying a cial subscription accou n ts are intended stock so registered. (r) (1) If, prior to and including O c to facilita te equity fin an cin g by corpora (c) In determ ining w hether a security tober 20, 1967, but on or after June 15, tions, and to help stockholders retain is a “stock registered on a n ation al secu 1959, a loan was m ade for th e purpose of their proportionate in terest in the issuer, rities exch an ge” or a “redeem able secu purchasing or carrying a security other by m aking it possible to borrow for th e rity ” described in paragraph (b) (2) of th a n a stock registered on a n ation al purpose of exercising subscription rights th is section, a bank m ay rely upon any securities exchange and th e loan is se on m ore favorable term s th a n those gen reasonably current record o f such secu cured by the security, but subsequently erally available under th e m argin regula rities th a t Is published or specified in a th ere is substituted as direct or indirect tions. T he B oard’s rules relatin g to such publication of the Board o f G overnors collateral for th e loan a stock so reg is accounts contem plate, however, th a t such loans sh all be brought up to a fully m ar gined statu s w ithin 9 m onths. It h as com e to th e B oard’s atten tio n th a t in m any in stan ces th is im provem ent in the m argin statu s of subscription a c count loans does not take place, leaving the account vulnerable to m argin calls in any subsequent general stock price de cline, and th e proposed am endm ents re latin g to such accounts would require th a t the difference betw een the am ount o f th e loan and the m axim um loan value of th e securities serving a s( collateral for the loan shall be paid off 'in four equal quarterly in stallm en ts (unless th e loan becom es fu lly m argined before th is has been done, due to a change in m argin requirem ents or an increase in th e loan value of th e co llatera l), and th a t the loan sh all th en be eligible for transfer to th e general (m argin) account. If the borrower failed to m ake a required p ay m ent, the loan would be liquidated. (2) Convertible bonds. At present, R egulation U perm its a bank to lend as m uch as it sees fit a g a in st nonequity securities (chiefly b o n d s), but all regis tered securities, w hether equities or n o n equities, are subject to ordinary m argin requirem ents under T. At th e sam e tim e, there appears to have been a substantial increase in credit extended by banks to finance the purchase of certain con vertible bonds. T he present § 221.3(r) of U provides th a t a bank loan to purchase a convertible bond, w here th e bond is pledged to secure th e loan, m ust be brought into conform ity w ith ordinary m argin requirem ents w ith in 30 days after conversion takes place. T he proposed am endm ents would treat any security convertible into a registered stock as “stock” for purposes of R egu la tion U, so th a t loans by banks to pur chase or carry such securities w ould be subject to ordinary m argin requirem ents from th e outset. At the sam e tim e, the proposed changes would give good fa ith loan value to n on convertible registered bonds under R eg ulation T, thus removing, to th e exten t perm itted by section 7 of th e Securities E xchange Act of 1937, th e unequal trea t m en t of banks, brokers, and dealers, under the two regulations. (3) Separate bond accounts. U nder the law, the Board has authority to re quire th a t m argin accounts m a in ta in CFR 221.111) sta tin g th a t th e "sam em inim um m argin statu s at all tim es, but d ay” rule obtains under U. for reasons discussed, for exam ple, in the In addition, th e proposed changes Special Study of th e Securities M arkets, would close a loophole in th e present subm itted to Congress in 1963 by th e §§221.2 (f ) , (g ), and (h ) o f R egu lation Securities and E xchange C om m ission, it U w hich appears to perm it a bank to has n o t done so. However, in 1959, th e m ake a “clearance lo a n ” in respect to Board adopted th e so-called “reten tion tran saction s w ith a broker th a t are car requirem ent” under w hich it w as e x ried in som e account other th a n th e sp e pected th a t underm argined accounts cial cash account. T he ch a n ges would would gradually tend to be brought in to m ake it clear th a t such loan s are not e x conform ity w ith th e current level of m ar em pt if m ade to enable a borrower to pay gin requirem ents, thus reducing th e a g for equity securities purchased in any gregate am ount of credit in th e m arket account subject to R egu lation T. due to existin g accounts, and m inim izing A proposed new § 221.3 (t) o f R egu la to som e ex ten t the unfairness to an in tion U would forbid a bank to perform vestor new ly entering the m arket of re services in con n ection w ith any loan th a t quiring him to put up more m argin th a n is for th e purpose o f purchasing or is dem anded of an investor w ith an e x carrying equity securities, and secured by such securities, unless the loan is istin g account. In order to provide som e in vestm en t m ade and m ain tain ed in conform ity flexibility in underm argined accounts, w ith P art 207, 220, or 221 (R egulation G, th e Board perm itted sub stitu tion s by T, o r U ). F inally, a new § 221.3(u) o f R egu la m eans o f offsetting purchases and sales, executed on th e sam e day, w ith ou t th e tion U would prohibit a bank from deposit of additional m argin— th e arranging credit for a custom er on term s “sa m e-d a y ” rule. However, abuses have m ore favorable th an could be provided occurred through substitution into bonds by th e bank itself. T h is n o tice is published pursuant to or exem pted securities under th is rule. In order to prevent abuses of th is kind, § 553(b) o f T itle 5, U n ited S tates th e proposed am endm ents would require Code, and § 262.2(a) of th e rules o f pro th a t collateral consisting o f registered cedure o f th e Board o f Governors o f th e Federal Reserve System (12 CFR nonconvertible bonds or exem pted secu 2 6 2 .2 (a )). rities be segregated in a separate a c To aid in th e consideration o f th is count, under a new § 2 2 1 .3 (s). S uch collateral would have g o o d -fa ith loan m atter by th e Board, in terested persons value but no stock (and n o securities are invited to subm it, in w riting, relevant convertible into stock) could be h eld as data, views, or argum ents. Such m aterial collateral for a loan in such an account, should be sen t to th e Secretary, Board and th ere could be no exch an ge o f co l o f Governors o f th e Federal R eserve lateral between th e “bond a cco u n t” and System , W ashington, D.C. 20551, to be th e general, or margin, accou n t under received n ot later th a n N ovem ber 20, eith er regulation. To m inim ize th e bur 1967. U nder th e B oard’s rules regarding den o f having to transfer all nonequity availability of in form ation (12 CFR and exem pted securities already held in P art 261), such m aterials w ill be m ade m argin accounts, as to R egu lation U, available for inspection and copying to only transactions after October 20, 1967, any person upon request unless th e per and as to R egulation T, after th e effec son subm itting th e m aterial requests tive date of the am endm ents would be th a t it be considered confidential. affected. D ated at W ashington, D.C., th is 20th (4) Additional proposed changes inday o f October 1967. Regulation U. T he “sa m e-d a y ” rule d is By order of th e Board of Governors. cussed above does not appear exp licitly [ se al] M e r r it t S h e r m a n , in R egulation U. The proposed ch an ges Secretary. w ould insert into the regulation th e sub stan ce of an interpretation published in [F.R. Doc. 67-12622; Filed, Oct. 25, 1967; 8:45 a.m.] 1959 Federal Reserve B u lletin 590 (12
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