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Circular

Securities Credit Transactions

February 9, 1998

Circular No. 11024

Final and Proposed Amendments - Comments Invited by April 1

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The following is from a statement by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board has announced adoption of final amendments to reduce regulatory distinctions between broker-dealers, banks, and other lenders and to implement changes to the Board's securities credit regulations.

The amendments to Regulations G, T, U and X reflect changes to the Board's statutory authority under the Securities Exchange Act of 1934, as amended by the National Securities Markets Improvement Act of 1996, as well as amendments designed to simplify the regulations and reduce burden. They do not change the margin requirements for stocks and convertible bonds. The amendments provide for merging Regulation G into Regulation U, thereby eliminating Regulation G. The Board also will discontinue publication of its quarterly list of over-the-counter (OTC) market stocks that are subject to its margin regulations for broker-dealers effective January 1, 1999, and for other lenders effective April 1, 1998.

The final amendments are effective April 1, 1998.

Compliance with Regulation T is optional until July 1, 1998.

The Board also announced an advance notice of proposed rulemaking and requested public comment to amend Regulations T, U, and X.

Comment is requested by April 1, 1998.

Comment is sought on all aspects of these regulations, including issues stemming from the consolidation of Regulation G into Regulation U.

The Board's proposal, as published in the Federal Register of January 16 is available as a (pdf - 36kb) file. Comments may be submitted to the Board by April 1, 1998, as specified in the notice.

In addition, the final revisions to the regulations, also as published in the Federal Register of January 16 is available as a (pdf - 257kb) file. The effective date is April 1, 1998; however, compliance with the revised Regulation T is optional until July 1, 1998. Comments on these changes are also invited by April 1. Note that the quarterly list of OTC market stocks that are subject to the margin regulations for broker-dealers will be discontinued effective January 1, 1999, and for other lenders, effective April 1, 1998.

Questions on these matters may be directed to the Board, as specified in the notices, or, at this Bank, to Barbara J. Yelcich, Examining Officer.

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