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FEDERAL RESERVE BANK OF N EW YORK P Circular No. 6 3 9 L A ugust 25, 1969 Amendments to Regulations G and U To All Banks and Regulation G Registrants in the Second Federal Reserve D istrict: Effective August 13, the Board of Governors of the Federal Reserve Sys tem amended section 207.4(f) of Regulation G and section 221.3(x) of Regula tion U. Enclosed are copies of both amendments. The amendments add a new subparagraph (2) to those sections to permit the extension of an exempt credit, in connection with the wholesale financing of equity funding plans or pro grams, to Regulation G registrants who extend credit secured by certain mutual fund shares, pledged in conformity with the provisions of a rule of the Securities and Exchange Commission regarding hypothecation of customers’ securities, and accompanied by a statement received by the person extending the credit that such securities are carried for the account of one or more customers under an equity funding plan, program, or investment contract. Additional copies of the amendments will be furnished upon request. A lfred H ayes, President.. SECURITIES CREDIT B Y PERSONS O TH ER T H A N B A N K S, B R O K E R S, OR DEALERS AM ENDM ENT TO REGULATION G Issu ed by t h e B oard o f G ov ern ors o f t h e Effective A ugust 13, 1969, $ 2 0 7 .4 (f) is amended to read as fo llo w s : § 207.4— M IS C E L L A N E O U S P R O V IS IO N S # * * ( f ) Combined purchase of mutual funds and insurance. (1 ) A n extension o f purpose credit provided fo r in a plan, program , or invest ment contract that is registered with the Securities and Exchange Commission under the Securities A ct o f 1933 (15 U .S.C. 77) and provides fo r the acquisition both o f a security issued by an invest ment com pany described in 5 2 0 7 .2 (d )(5 ) and o f an insurance p olicy or contract shall be subject to all the provisions o f this part, except that, where the credit is secured by the security and does not exceed the premium on such p olicy (plu s any applicable interest), the maximum loan value o f such security shall be 40 per cent of its current F e d e r a l R e s e r v e S y ste m market value, as determined by any reasonable method. (2 ) Sections 2 0 7 .1 (c ), ( d ) , ( f ) , ( g ) , (h ), ( i ) , and ( j ) o f this part shall not ap p ly to any credit extended to a person registered pursuant to § 20 7.1(a ) who extends credit pursuant to subparagraph (1 ) o f this paragraph, P rovided, T h at: ( i) the credit extended pursuant to this subpara graph is secured by securities that are issued by an investment com pany described in § 20 7.2(d) (5 ), and are carried fo r the account o f one or more customers under a plan, program , or investment contract described in subparagraph (1 ) o f this paragraph (and the person extending such credit receives written notice from the recipient o f the credit to this e ffe c t ); and (ii) the provisions o f such plan, program , or investment contract conform to the provisions o f Rule 15 c2 -l o f the Securities and Exchange Com mission concerning hypothecation o f customers’ securities (17 C F R 24 0.15 c2 -l). PR IN TE D I N N E W YORK CREDIT B Y BANKS FOR THE PURPOSE OF PURCHASING OR CARRYING MARGIN STOCKS AM ENDM ENT TO REGULATION U Is s u e d b y t h e B o a rd op 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 r v e S y s te m E ffective A ugust 13 ,1969, § 221.3 (x ) is amended to read as fo llo w s : § 221.3— M IS C E L L A N E O U S P R O V IS IO N S * * * (x ) C o m b in e d p u r c h a s e o f m u tu a l fu n d s a n d in s u r a n ce . (1 ) A n extension o f purpose credit provided fo r in a plan, program , or invest ment contract that is registered with the Securities and E xchange Commission under the Securities A ct o f 1933 (15 U .S.C. 77) and provides fo r the acquisition both o f a security issued by an invest ment com pany described in paragraph (v ) (5 ) o f this section and an insurance p olicy or contract shall be subject to all the provisions o f this part, except that, where the credit is secured by the security and does not exceed the premium on such p olicy (plus any applicable interest), the maximum loan value o f such security shall be 40 per cent o f its current market value, aa determined by any rea sonable method. (2 ) Sections 221.1 and 22 1.3(t) o f this part shall not ap p ly to any credit extended to a person registered pursuant to § 20 7.1(a ) o f this Chapter (R egulation G ) who extends credit pursuant to § 2 0 7 .4 (f) (1 ) o f this Chapter, P rovided, T h at: (i) the credit extended pursuant to this subpara graph is secured by securities that are issued by an investment com pany described in paragraph (v ) (5 ) o f this section, and are carried fo r the account o f one or m ore customers under a plan, program , or investment contract described in subparagraph (1 ) o f this paragraph (and the bank receives written notice from the recipient o f the credit to this e ffe c t ); and (ii) the provisions o f such plan, program , or investment contract conform to the provisions o f Rule 15 c2 -l o f the Securities and Exchange Com mission concerning hypothecation o f customers’ securities (17 C F R 2 4 0.15 c2 -l). PR IN T E D I N N E W YO RK
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