Full text of Federal Reserve Notes : March 1985

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Federal Re/erve Dote/
Federal Re/erve Bank of /an Franci/co •

March 1985

/erving fflci/ka, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, & UJa/hington

FOR PUBLIC COMMENT

Voluntary Capital
The New York Federal Reserve Bank is proposing voluntary capital adequacy standards for U.S.
Adequacy Guidelines government securities dealers not currently covered by other forms of federal supervision or over
sight, and has requested comments by March 31, 1985.

At the heart of the proposal is a guideline specifying that dealers' liquid capital-to-potential risk ratio
should always exceed 1.2 to 1. The proposal suggests a system of formulas to estimate the amount
of money that could be lost in a significantly adverse market, and requires that a participating dealer
in government securities keep the size of its risk consistent with the amount of liquid capital
available to absorb losses.

Comments should be addressed to Mr. Edward J. Geng, Senior Vice President, Federal Reserve
Bank of New York, 33 Liberty Street, New York City, NY 10045. Further information is available by
calling Public Information at (212) 691-6141.
Regulation T
Credit by Brokers
and Dealers

The Federal Reserve Board is requesting public comment by March 15, 1985, on an amendment to
Regulation T that would change the initial margin requirements for the writing of options on equity
securities. The Board presently specifies the margin requirement at 30 percent of the value of the
underlying securities plus any unrealized loss or minus any unrealized gain.

The proposed amendment would require an initial margin that is identical to the maintenance margin
required by the National Securities Exchange or associations under rules that have been approved
by the Securities and Exchange Commission.

The Board's notice is available from Corporate Services at (415) 974-2752. For further information,
please contact David Vandre in Consumer Affairs at (415) 974-2965.
Regulation Y
BHC and Change in
Bank Control

The Federal Reserve Board is requesting comment by March 29, 1985 on whether it should initiate
rules establishing a framework for bank holding companies (BHCs) to engage in real estate invest
ment activities. Some of the specific conditions on which the Board is requesting comment follow:

• A requirement that the activity be conducted only through a direct real estate subsidiary of the
BHC

• A requirement that the BHC meet certain capital requirements before it could engage in real estate
activities

•

A limitation on the amount of a BHCs investment in real estate subsidiaries and a limitation on

leverage for the subsidiaries

• A geographic limitation on real estate investment activities

The Board also is seeking comment on whether additional or alternative rules should be made to
limit the conduct of real estate activities through nonbank subsidiaries of banks controlled by BHCs.
The Board's notice is available from Corporate Services at (415) 974-2752. For further information,
please contact Robert Johnston at (415) 974-2352.

MONETARY POLICY OBJECTIVES FOR 1985

Federal Reserve Chairman Paul Volcker presented a report to the Congress on the Federal Reserve's monetary policy objec
tives for 1985 on February 20. The report includes a summary of the Federal Reserve's monetary policy plans along with a
review of economic and financial developments in 1984 and the economic outlook in 1985. Single or multiple copies of the
report can be obtained upon request from the Public Information Department, Federal Reserve Bank of San Francisco, P.O.
Box 7702, San Francisco, CA 94120. Phone (415) 974-2246.

REGULATIONS AND OPERATIONS UPDATE

Regulation C
Home Mortgage

Form HMDA-1, for reporting loan data under the Home Mortgage Disclosure Act and Regulation C,
has been revised. The changes relate primarily to style and terminology; the content and basic for

Disclosure Act

mat remain the same.

As in previous years, two copies of the report should be filed with a financial institution's
appropriate federal regulatory agency on or before March 31, 1985 and also be made available to the
public by that date. State-member banks should send their forms to the attention of Mr. David
Robbins, Consumer Affairs Specialist, Consumer Affairs Unit, Federal Reserve Bank of San Fran
cisco, P.O. Box 7702, San Francisco, CA 94120. Please contact David Robbins at (415) 974-2967
for further information.

Regulations G,T,U
List of Marginable
OTC Stocks

The Federal Reserve Board has published a list of over-the-counter (OTC) stocks subject to its
margin regulations, effective February 12, 1985. The List includes all over-the-counter securities
designated by the Board pursuant to its established criteria as well as all securities qualified for
trading in the national market system. The next publication of the Board's List is scheduled for May
1985.

Copies of the list are available from Corporate Services at (415) 974-2752. For further information,
please contact David Vandre in Consumer Affairs at (415) 974-2965.
Regulation J

The Federal Reserve has adopted amendments to Regulation J, governing checks, to improve the

Collection of Checks
and Other Items

system of notification for nonpayment of checks of $2500 or more that are processed through the
Federal Reserve. Simultaneously, the Board approved a proposal to improve notification services
offered by the Reserve Banks as part of the check collection process. Both actions will take effect
October 1, 1985.
The text of the amendments is available from Corporate Services at (415) 974-2752. For further in
formation, please contact Robert Mulford in our Law Department at (415) 974-2256.

Fees for Definitive
Securities Safe

The Federal Reserve Board approved revised fee structures that took effect February 28, 1985 for
the definitive securities safekeeping and noncash collection service.

keeping and Noncash
Collection Services

Changes that have been implemented in the Twelfth District include: (a) a $10 fee charged to
depositing institutions for each coupon deposit that is returned as uncollectible and (b) an increase
in the coupon envelope fee from $4 to $5. The Twelfth District has no plans for offering the mixed
deposit program or for charging a higher fee for collecting items payable at country endpoints.
Also, the San Francisco Reserve Bank does not offer definitive securities safekeeping except under
certain collateral arrangements.
Copies of the Board's notice and the revised fee structures are available from Corporate Services at
(415) 974-2752. For further information, please contact David Kerr (415) 974-2345.

STRIPS Program

On January 15, 1985, the Treasury Department announced a new program to facilitate Separate
Trading of Registered Interest and Principal of Securities (STRIPS). Under this program, selected
Treasury securities may be maintained in the book-entry system operated by the Federal Reserve
Banks in a way that permits interest and principal payments to be separately owned and traded. This
will make it possible, for the first time, for the market to trade separate principal and interest com
ponents, or zero coupon instruments, in book-entry form as direct obligations of the United States.

The Treasury Department's statement is available from Corporate Services at (415) 974-2752. For
further information, please contact the Securities Services officer at your local Federal Reserve
Branch.