Full text of Federal Reserve Bank of New York Circulars : 9626. Proposed Amendment to Regulation T

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FEDERAL RESERVE BANK
OF MEW YORK

Circular No. 9 6 2 6
January 25, 1984

P R O P O S E D A M E N D M E N T TO R E G U L A T IO N T
A c c e p ta n c e o f M argin S ecu rities by an O ptions C le a rin g A g e n c y

To A ll Banks, Brokers and Dealers, and Persons Extending
Securities Credit in the Second Federal Reserre District:

Following is the text of a statement issued by the Board of Governors of the Federal Reserve
System:
The F ederal Reserve Board has published, for public comment, a proposal to amend
Regulation T, C redit by Brokers and Dealers,
The Board requested comment by F ebruary 15, 1984.
The proposed rule would perm it an options clearing agency regulated by the Securities and
E xchange Commission (SEC) to accept any m argin securities to m eet its deposit requirem ents
provided the clearing agency rules reg ard in g the deposit have been approved by the SEC. An
options clearing corporation issues options contracts and guarantees their perform ance.
The B oard’s cu rre n t rule perm its the use of a more lim ited class of securities. The B oard’s
action is intended to coincide with related action by the SEC on rules th a t have been filed with the
Commission by the Options C learing Corporation. The proposed action will generally perm it brokers
and dealers to use the sam e securities for the clearing deposit as they now use at banks in connection
with loans secured by custom er securities.

Printed on the reverse side is the text of the Board’s proposal, which has been reprinted from
the F e d e r a l R e g is te r of January 17, 1984. Comments thereon should be submitted by February 15,
1984, and may be sent to our Regulations Division (Tel. No. 212-791-5914).




A n t h o n y M. S o l o m o n ,
P r e s id e n t.

(Over)

FED ER AL R E SE R V E SYSTEM
12 CFR Part 220
[Docket No. R-0500]
Credit By Brokers and Dealers;
Regulation T
AGENCY: Board of Governors of the
Federal Reserve System,
ACTIO N: "Proposed rule.
SUMMARY: The Board is proposing to
amend Regulation T (12 CFR Part 220,
Credit By Brokers and Dealers) to permit
an options clearing agency to accept
margin securities to meet its deposit
requirements. This action is being taken
in order to facilitate the SEC’s approval
of a proposed Options Clearing
Corporation program whereby the class
of securities eligible for the options
clearing agency’s deposit requirements
will be expanded.
DATE: Comments should be received on
or before February 15,1984.
a d d r e s s : Comments, which should
refer to Docket No. R-0500, may be
mailed to Mr. William W. Wiles,
Secretary, Board of Governors of the
Federal Reserve System, 20th Street and
Constitution Avenue, NW., Washington,
D.C. 20551 or delivered to the C Street
Entrance between 8:45 a.m. and 5:15
p.m.
FOR FURTHER INFORMATION CONTACT:

Laura Homer, Securities Credit Officer,
or Robert Lord, Attorney, Division of




Banking Supervision and Regulation
program to take place without
(202) 452-2781.
unnecessary delay. The amendment to
Regulation T would permit the deposit
SUPPLEMENTARY INFORMATION: The
of any margin security which also meets
Options Clearing Corporation (“OCC")
SEC-approved criteria for clearing
has a program (“valued securities
deposits.
program”) in which it accepts certain
margin securities from its clearing
Initial Regulatory Flexibility Analysis
members in satisfaction of their OCC
The change proposed pursuant to this
deposit requirements. OCC’s activities
action reduce specific administrative
are subject to Regulation T, which
and regulatory burdens. The Board
currently permits the deposit only of any certifies for purposes of 5 D.S.C. 605(b),
underlying securities for classes of
therefore, that the proposed amendment
option contracts outstanding at the time
to Regulation T is not expected to have
of the deposit. OCC recently filed a
any adverse impact on a substantial
proposed rule change (File No. SRnumber of small businesses.
OCC-83-17) with the SEC to expand its
valued securities program by eliminating List of Subjects in 12 CFR Part 220
the requirement that only stocks
Banks, Banking, Borrowers, Brokers,
underlying listed options can be
Credit, Federal Reserve System, Margin,
deposited with OCC, and permitting the
Margin requirements.
deposit of any common stocks which (i)
PART 220— [AM ENDED]
are traded on a national securities
exchange, or are NASDAQ securities
Accordingly, pursuant to sections 7, 8,
that are designated as National Market
and 23 of the Securities Exchange Act of
System securities pursuant to SEC Rule
1934, as amended (15 U.S.C. 78g, 78h,
HAa 2-1 (17 CFR 240.1lAa-2), (ii) have
and 78w) the Board proposes to amend
last sale reports disseminated on the
Regulation T (12 CFR Part 220) as
consolidated tape and (iii) have a
followsmarket value greater than $10 per share;
In § 220.14(b), paragraphs (3) and (4)
provided that stocks which are
would
be deleted in their entirety, and
suspended from trading or which are
replaced with a single new paragraph
subject to special requirements under
(b)(3), which would read as follows:
exchange margin rules may not be
deposited with OCC. The Board believes § 220.14 Clearance of securities.
the rule change proposed by OCC is
*
*
*
*
*
appropriate and, therefore, is proposing
(b) * * 0
an amendment to Regulation T that, in
(3)
the deposit consists of any margin
conjunction with the SEC rule approval,
security and complies with the rules of
will permit the expanded deposit
the clearing agency which have been

approved by the SEC.
By order of the Board of Governors of the
Federal Reserve System. January 11,1984.
William W. Wiles,
S ecreta ry o f the Board.
[FR Doc. 64-1133 Filed 1-18-64; 8:45 am)