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FED ER AL RESERVE BANK OF NEW YORK 1“ Circular No. 7 4 9 8 L November 1 1974 ” | J AMENDMENTS TO REGULATIONS G, T, AND U T o A ll P erson s E xtending Securities Credit in the Second Federal R eserve D istrict: As indicated in our Circular No. 7497, which was sent to you on November 6, 1974, the Board of Governors of the Federal Reserve System has suspended for six months the restrictions that have applied to the use of the same-day substitution privilege in stock margin accounts. Enclosed is a copy of amendments, effective November 5, to the Board of Gov ernors’ margin Regulations G, T, and U, reflecting the suspension. In submitting the amendment for publication in the Federal Register, the Board made the following statement: The Board's securities credit regulations, Parts 207, 220, and 221 (Regulations G, T, and U ), generally require that in the case of purchase-and-sale substitutions of securities in an undermar gined account a specified portion of the sale proceeds must be used to strengthen the account; but until September 18, 1972, there was an exemption from that requirement when both the purchase and sale were executed on the same day. By amendments published in the Federal Register at 37 Fed. Reg. 13972, effective September 18, 1972, the Board narrowed the sameday exemption and limited it to accounts where the customer’s equity was at least 40%. The limitation in the September 18, 1972 amendments is now being suspended for a six-month period, from November 5, 1974, through May 5, 1975, while the Board reviews the appropriateness or inappropriateness in present circumstances of maintaining the 40% require ment with respect to the exemption of same-day substitutions. The result of the Board’s action in suspending the limitation will be to reinstate for a sixmonth period the rules which were in effect before September 18, 1972, permitting the substitu tion of collateral in all undermargined accounts, without using a portion of the sale proceeds to strengthen the account, when the substitution is effected by a purchase and sale executed on the same day. Additional copies of the enclosure will be furnished upon request. A lfred H ayes , President. Board of Governors of the Federal Reserve System AMENDMENTS TO REGULATIONS G, T, AND U Effective November 5, 1974 A M E N D M E N T T O R E G U L A T IO N G — S E C U R IT IE S C R E D IT B Y P E R S O N S O TH E R TH A N BANKS, BROKERS, OR DEALERS Paragraph ( f ) of § 207.5 (the Supplement to Regulation G ) is amended to read as follows : S e c tio n 207.5 — S u p p le m e n t * * A M E N D M E N T T O R E G U L A T IO N T — C R E D IT B Y B R O K E R S A N D D E A L E R S Paragraph ( g ) of § 220.8 (the Supplement to Regulation T ) is amended by adding a new subparagraph (3 ) thereto, to read as follows: S e c tio n 220.8 — S u p p le m e n t * Account subject to section 8(g). * * * * * * (3 ) For the period November 5, 1974, through May 5, 1975, all transactions permitted by §§ 2 20 .3(b ) (1 ) and 2 2 0 .3 (g) for accounts not subject to section 8 ( g ) shall also be per mitted in accounts subject to section 8 ( g ) . * (f) Minimum equity ratio. The minimum equity ratio of a credit subject to § 207.1 is 40 percent. For the period November 5, 1974, through May 5, 1975, all same-day substitutions of collateral permitted by § 2 0 7 .1 ( j) ( 2 ) for credits in which the equity ratio equals or ex ceeds the minimum equity ratio shall also be permitted for all credits in which the equity ratio is less than the minimum equity ratio. * (g ) * A M E N D M E N T T O R E G U L A T IO N U — C R E D IT B Y B A N K S F O R T H E P U R P O S E O F P U R C H A S IN G O R C A R R Y IN G M A R G IN S T O C K S Paragraph ( f ) of § 221.4 (the Supplement to Regulation U ) is amended to read as follow s: S e c tio n 221.4 — S u p p le m e n t * * * ( f ) Minimum equity ratio. The minimum equity ratio o f a credit subject to § 221.1 is 40 percent. For the period November 5, 1974, through May 5, 1975, all same-day transactions permitted by § 221.1( c ) for credits in which the equity ratio is equal to or exceeds the mini mum equity ratio shall also be permitted for those credits in which the equity ratio is less than the minimum equity ratio. P R IN TE D IN N E W YORK
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