[Federal Register Volume 63, Number 11 (Friday, January 16, 1998)]
[Proposed Rules]
[Pages 2840-2844]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-885]
Federal Register / Vol. 63, No. 11 / Friday, January 16, 1998 /
Proposed Rules
[[Page 2840]]
FEDERAL RESERVE SYSTEM
12 CFR Parts 220, 221 and 224
[Regulations T, U and X; Docket No. R-0995]
Securities Credit Transactions
AGENCY: Board of Governors of the Federal Reserve System.
ACTION: Advance notice of proposed rulemaking and request for comment.
-----------------------------------------------------------------------
SUMMARY: In 1995 and 1996, the Board proposed three sets of amendments
to its securities credit or margin regulations (Regulations G, T and
U). These amendments were proposed in part based on a review of the
margin regulations the Board is conducting pursuant to its internal
policy of periodically reviewing its regulations and section 303 of the
Riegle Community Redevelopment and Regulatory Improvement Act of 1994
and in part on statutory amendments to the Board's margin authority
under the Securities Exchange Act of 1934 (the '34 Act) contained in
the National Securities Markets Improvement Act of 1996. In a separate
document published elsewhere in today's Federal Register, the Board is
adopting final amendments to Regulations G, T and U in response to the
three proposals. The final amendments include the extension of
Regulation U to cover lenders formerly subject to Regulation G and the
elimination of Regulation G.
In the course of the comment process for the Board's 1995-1996
proposals, commenters raised a number of issues not addressed by the
Board in the proposals. In order to complete the periodic review of its
margin regulations, the Board is publishing this advance notice and
request for comment for Regulations T, U and X. After reviewing the
comments, the Board may issue specific proposed amendments for public
comment.
DATES: Comments should be received by April 1, 1998.
ADDRESSES: Comments should refer to Docket No. R-0995 and may be mailed
to William W. Wiles, Secretary, Board of Governors of the Federal
Reserve System, 20th Street and Constitution Avenue, N.W., Washington,
DC 20551. Comments also may be delivered to Room B-2222 of the Eccles
Building between 8:45 a.m. and 5:15 p.m. weekdays, or to the guard
station in the Eccles Building courtyard on 20th Street, N.W. between
Constitution Avenue and C Street, N.W. at any time. Comments received
will be available for inspection in Room MP-500 of the Martin Building
between 9:00 a.m. and 5:00 p.m. weekdays, except as provided in 12 CFR
261.14 of the Board's rules regarding availability of information.
FOR FURTHER INFORMATION CONTACT: Oliver Ireland, Associate General
Counsel (202) 452-3625; Scott Holz, Senior Attorney (202) 452-2966; or
Jean Anderson, Staff Attorney (202) 452-2966, Legal Division; for the
hearing impaired only, Telecommunications Device for the Deaf (TDD),
Diane Jenkins (202) 452-3544.
SUPPLEMENTARY INFORMATION: Pursuant to its authority under sections 3,
7, 17 and 23 of the Securities Exchange Act of 1934, the Board is
requesting comment on its securities credit or margin regulations:
Regulation T (``Credit by brokers and dealers''),1
Regulation U (``Credit by banks and lenders other than brokers or
dealers for the purpose of purchasing or carrying margin stock'')
2 and Regulation X (``Borrowers of securities
credit'').3 The Board is soliciting comment on all aspects
of these regulations, including issues stemming from the consolidation
of Regulation G into Regulation U and issues that have been raised by
commenters in the past two years and not addressed in the Board's
earlier amendments. The Board is soliciting comment on whether and how
to address these issues. Any additional amendments would be proposed
for public comment before adoption.
---------------------------------------------------------------------------
\1\ 12 CFR Part 220.
\2\ 12 CFR Part 221.
\3\ 12 CFR Part 224.
---------------------------------------------------------------------------
Table of Contents
I. Regulation T
A. Definitions
1. Current market value
2. Good faith
3. Margin security
B. Margin account
1. Guarantees as collateral
2. Cashless exercise of employee benefit securities
C. Cash account: net settlement and free riding
D. Lending foreign securities to foreign branches of U.S. banks
E. Broker-dealer purchases of privately placed debt securities
F. Presumption of purpose credit
II. Regulation U
A. Forms
1. Purpose statement
2. Other forms and registration requirements
a. Use of Regulation G forms under Regulation U
b. Registration requirements
(1) Dollar thresholds
(2) Nonpurpose lenders
B. Loan Value
1. Options
2. Mutual funds
C. Exempted transactions
III. Regulation X
A. National Securities Markets Improvement Act
B. Periodic Review
IV. All Regulations
A. Definition of national securities exchange
B. Purpose statements as model forms
C. Repurchase of securities by issuer
D. Forward transactions
I. Regulation T
A. Definitions
1. Current Market Value
The Board's margin requirement for an equity security is a
percentage of the security's current market value. As a technical
amendment contained in a separate document published elsewhere in
today's Federal Register, the Board adopted a Regulation T definition
of the phrase current market value that incorporates former
Sec. 220.3(g) of Regulation T (``Valuing securities''). This definition
is not exactly the same as the definition in Regulation U. Under the
Regulation T definition, a broker-dealer must use the cost of a
security or the proceeds of its sale to compute the current market
value of a security on trade date. Under the Regulation U definition, a
lender other than a broker-dealer extending credit on trade date may
use either the security's cost or the closing price of the security on
the preceding day. The Board is soliciting comment on whether the
definitions of current market value in the two regulations should be
harmonized.
2. Good Faith
The Board is requesting comment on whether it should propose to
replace the current definition of good faith found in Sec. 220.2 of
Regulation T with a simpler, more universal definition. For example,
the Uniform Commercial Code defines ``good faith'' in Sec. 3-103(a)(4)
as ``honesty in fact and the observance of reasonable commercial
standards of fair dealing.'' The Board seeks comment on whether this
definition would be appropriate in the context of margin regulation.
3. Margin Security
Last year, the Board amended the definition of margin security to
include ``any debt security convertible into a margin security.'' The
Board stated that this would mirror the treatment of convertible bonds
in Regulations G and U. The actual language of Regulation U (which now
covers banks and lenders formerly subject to Regulation G) is somewhat
broader: ``any debt security convertible into a margin stock or
carrying a warrant or right to subscribe
[[Page 2841]]
to or purchase a margin stock.'' The Board is soliciting comment on
whether it should propose to use the same regulatory language in
Regulation T. The Board is also soliciting comment on whether it should
propose to further amend Regulation T's definition of margin security
to include ``any warrant or right to subscribe to or purchase a margin
stock,'' as this language is also found in Regulation U. Finally, the
Board is soliciting comment on whether it should propose to broaden the
coverage of convertible securities under the Regulation T definition of
margin security to include any security convertible into a margin
security. This last change would allow loan value for nonmargin equity
securities which are convertible into a margin security.
B. Margin Account
1. Guarantees as Collateral
Guarantees are currently given no effect for purposes of meeting
federal margin requirements pursuant to Sec. 220.3(d) of Regulation T,
but guaranteed accounts are permitted by the rules of some self-
regulatory organizations (SROs) 4 for maintenance margin
purposes. These SRO rules effectively allow two or more customers with
accounts at a single broker-dealer to ``cross-guarantee'' some or all
of their accounts. The guarantee must be in writing and allow the
broker-dealer to use the money and securities in the guaranteeing
account without restriction to carry the guaranteed account or pay any
deficit therein. The Board is soliciting comment on whether it should
propose an amendment to Regulation T to allow broker-dealers to
recognize guarantees to the extent permitted by their SROs.
---------------------------------------------------------------------------
\4\ The primary SROs for broker-dealers in this area are the New
York Stock Exchange and the National Association of Securities
Dealers.
---------------------------------------------------------------------------
2. Cashless Exercise of Employee Benefit Securities
Section 220.3(e)(4) of Regulation T was adopted in 1988 to allow
broker-dealers to temporarily finance the exercise of their customers'
employee stock options. This procedure has come to be known as
``cashless exercise.'' In 1995, the Board proposed new language for
Sec. 220.3(e)(4) to expand its coverage to other types of employee
benefit securities, such as employee stock warrants. The proposed
amendment, which was adopted in 1996 substantially in the form
proposed, changed the reference in Sec. 220.3(e)(4) of Regulation T
from ``a stock option issued by the customer's employer'' to securities
received ``pursuant to an employee benefit plan registered on SEC Form
S-8.'' After adoption of the amendment, the Board received several
comments which noted that the amended provision in some respects covers
fewer securities than the original version in that it no longer covered
employee stock options not registered on SEC Form S-8. The Board is
soliciting comment on whether it should propose further amendments to
Sec. Sec. 220.3(e)(4) to ensure that broker-dealers may use the
provision to help all customers who need short-term financing to
acquire employee benefit securities. Comment is invited on whether the
Board should define what is meant by the phrase ``employee benefit
securities.''
C. Cash Account: Net Settlement and Free Riding
All transactions in a margin account on a given day are combined to
determine whether additional margin is required. In contrast,
transactions in the cash account are generally settled on a
transaction-by-transaction basis. Although net settlement in the cash
account would be more efficient than current practice, the requirement
that securities be paid for before being sold and the 90-day freeze
5 on delaying payment beyond trade date for customers who
have sold securities before paying therefor have been adopted to
prevent ``free riding,'' the purchase of a security that is paid for
with the proceeds of its sale. The Board believes that free riding
raises supervisory as well as credit issues and is soliciting comment
on whether it would be appropriate to modify the cash account to
encourage efficiencies while still preventing free riding and if so,
how. The Board is also soliciting comment on whether it should leave
the issue of free riding to the broker-dealers' supervisory
authorities: the Securities and Exchange Commission (SEC) and SROs. The
Board is also soliciting comment on appropriate methods for addressing
free riding in Regulation U.
---------------------------------------------------------------------------
\5\ See Sec. 220.8(c) of Regulation T.
---------------------------------------------------------------------------
D. Lending Foreign Securities to Foreign Branches of U.S. Banks
The Regulation T section on borrowing and lending securities
6 was amended in 1996 to allow broker-dealers to lend most
foreign securities to foreign persons without many of the restrictions
applied to loans of U.S. securities. Three commenters pointed out that
the term ``foreign persons'' does not include foreign branches of U.S.
banks. The Board is soliciting comment on whether it should propose an
amendment to allow foreign branches of U.S. banks to qualify as foreign
persons for purposes of Regulation T's requirements for borrowing and
lending equity securities.
---------------------------------------------------------------------------
\6\ Formerly Sec. 220.16, now Sec. 220.10 of Regulation T.
---------------------------------------------------------------------------
E. Broker-Dealer Purchases of Privately Placed Debt Securities
The Board views the purchase of a privately placed debt security as
an extension of credit to the issuer. Broker-dealers who wish to
purchase privately placed debt securities (generally for resale) whose
proceeds will be used by the issuer to purchase or carry securities
have been unable to do so if the debt securities are unsecured or
secured by collateral other than margin and exempted securities because
the Board had interpreted section 7 of the '34 Act to prohibit the
extension of purpose credit that is unsecured or secured by collateral
other than securities valued in accordance with Regulation T. Banks and
persons other than broker-dealers who purchase these privately placed
securities have not had the same problem as they have never been
restricted in their ability to make purpose loans that are unsecured or
secured by collateral other than securities.
In 1990, the Board issued an interpretation of the arranging
provision in Regulation T to address purchases by broker-dealers of
debt securities issued pursuant to SEC Rule 144A.7 Under the
interpretation, the purchase of a privately placed debt security whose
proceeds will be used by the issuer to purchase, carry, or trade
securities is permitted for a broker-dealer if the security is issued
pursuant to SEC Rule 144A on the theory that the broker-dealer is
arranging for the ultimate purchaser to acquire the
security.8
---------------------------------------------------------------------------
\7\ The Board interpretation is codified at 12 CFR 220.131 and
reprinted in the Federal Reserve Regulatory Service at 5-470.1. SEC
Rule 144A, ``Private resales of securities to institutions'' is
codified at 17 CFR 230.144A.
\8\ The Board interpretation described the broker-dealer's role
as an ``investment banking service'' because the version of
Regulation T in effect at the time had limited exceptions to the
general arranging prohibition. The Board has since amended the
arranging section in Regulation T to broaden permissible activities
and in the process has eliminated the need for a specific investment
banking services exception.
---------------------------------------------------------------------------
The Board is soliciting comment on whether it should propose any
amendments to Regulation T to allow broker-dealers to purchase
privately placed securities that either comply with or are not covered
by Regulations U and X. Possible amendments could address this issue as
one of extending
[[Page 2842]]
rather than arranging credit and could cover debt securities beyond
those covered in the Board's 1990 interpretation.
F. Presumption of Purpose Credit
Section 220.6(f)(2) of Regulation T (formerly Sec. 220.9(b)) states
that every extension of credit (aside from those effected to carry
transactions in commodities or foreign exchange) is deemed to be
purpose credit unless the broker-dealer obtains in good faith a written
statement from its customer that the credit is not purpose credit. The
Board is soliciting comment on whether it should propose to modify or
eliminate this presumption and if so, how to assure compliance with the
Board's margin requirements in Regulation T.
II. Regulation U
A. Forms
1. Purpose Statement
Both Regulation G and Regulation U require lenders to obtain a
written statement from their customers as to the purpose of a loan if
the credit is secured by margin stock. This form is known as a
``purpose statement'' and is designated as the FR G-3 and FR U-1,
respectively. Although the margin requirements apply to all purpose
loans secured by margin stock, banks are not required to obtain a
purpose statement for loans that do not exceed $100,000. Nonbank
lenders, who are not required to register with the Board until they
have extended at least $200,000 in margin stock secured
credit,9 must obtain a purpose statement for every loan they
make after reaching the registration threshold. The Board is soliciting
comment on whether it would be appropriate to amend Regulation U to
provide uniform requirements for purpose statements, including possible
elimination of the form.
---------------------------------------------------------------------------
\9\ The $200,000 threshold is based on the amount of credit
secured by margin stock extended in any calendar quarter. Lenders
who extend less than $200,000 in credit secured by margin stock in
any calendar quarter are required to register with the Board if they
have $500,000 in credit secured by margin stock outstanding during
any calendar quarter.
---------------------------------------------------------------------------
2. Other Forms and Registration Requirements
a. Use of Regulation G forms under Regulation U: The FR G-1
(``Registration Statement For Persons Who Extend Credit Secured by
Margin Stock (Other Than Banks, Brokers or Dealers)''), FR G-2
(``Deregistration Statement For Persons Registered Pursuant to
Regulation G'') and FR G-4 (``Annual Report'') were retained as part of
Regulation U when it was extended to cover lenders formerly subject to
Regulation G. These forms' approval from the Office of Management and
Budget expires on July 31, 1998. Pending review of the comments
received in response to this request for comment, the Board intends to
redesignate these forms as Regulation U forms and is soliciting comment
on ways to improve the reporting requirements and eliminate unnecessary
burden, including possible elimination of the forms.
b. Registration requirements: The registration requirements for
lenders formerly subject to Regulation G have been moved to
Sec. 221.3(b) of Regulation U. Nonbank lenders who extend credit
secured by margin stock for any purpose are required to register with
the Federal Reserve within 30 days after any calendar quarter in which
the lender either: (1) Extends $200,000 or more in credit secured by
margin stock; or (2) has a total of $500,000 or more in credit secured
by margin stock outstanding. Persons other than banks and broker-
dealers who extend securities credit below these thresholds are not
subject to the registration requirements and are not limited by the
Board's 50 percent margin requirement for purpose loans secured by
margin stock.
(1) Dollar thresholds: When Regulation G was first adopted in 1968,
the Board established dollar thresholds for registration so that
lenders other than banks and broker-dealers who extended small amounts
of credit secured by margin stock would not be regulated. These
thresholds were initially $50,000 in margin stock secured credit
extended or arranged in one calendar quarter or $100,000 in such credit
outstanding at any time. These thresholds were last raised in 1983 to
$200,000 and $500,000 and the scope of the regulation was reduced at
that time to eliminate coverage of persons who arranged, but did not
extend, securities credit.
The Board is soliciting comment on whether it should propose
changes to the $200,000 and $500,000 thresholds for nonbank lenders.
(2) Nonpurpose lenders: When Regulation G was first proposed by the
Board in 1967, lenders other than banks and broker-dealers were to be
subject to the regulation only if they extended or arranged purpose
credit (which was proposed to mean credit to purchase or carry an
exchange traded security). Regulation G lenders who extended or
arranged nonpurpose credit would not have been required to register
with the Federal Reserve System even if the collateral for the loan
included exchange-traded securities. When Regulation G was adopted the
following year, the collateral coverage of the regulation was reduced
to eliminate debt securities but the registration requirement was
broadened to include any lender other than a bank or broker-dealer
involved in a loan secured by margin equity securities, regardless of
the purpose of the loan. Although the Board was originally concerned
with the difficulty of assuring that previously unregulated lenders
understood the concept of ``purpose credit'' (i.e. credit for the
purpose of purchasing or carrying securities covered by Board
regulation), the passage of time may have reduced the need to register
nonpurpose lenders solely to determine that the registrants are not
extending credit that is subject to the margin requirements.
The Board is soliciting comment on whether it should propose
changes to the registration requirements for lenders other than banks
and broker-dealers who do not extend purpose credit, such as
eliminating the need for registration or establishing higher dollar
thresholds. An example of a nonpurpose lender would be a mortgage
finance company that extends only purchase money mortgage loans but
occasionally takes margin stock as collateral in addition to mortgages.
B. Loan Value
1. Options
In a separate document published elsewhere in today's Federal
Register, the Board is eliminating the Regulation U prohibition on loan
value for exchange-traded options. When the Board first proposed this
change in 1995, it did not propose to remove the prohibition on loan
value for unlisted or over-the-counter (OTC) options.10
Since that proposal however, the Board has amended Regulation T to
allow securities self-regulatory organizations such as the New York
Stock Exchange to adopt SEC-approved rules granting loan value to all
options, both exchange-traded and over-the-counter. The Board is
soliciting comment on whether it should propose to modify the
prohibition on loan value for OTC options currently contained in
Regulation U.
---------------------------------------------------------------------------
\10\ Unlisted or OTC options are not margin stock as defined in
Sec. 221.2 of Regulation U. Therefore, a loan secured by OTC options
and other nonmargin stock collateral would not be subject to
Regulation U. However, a purpose loan secured in part by margin
stock (a ``mixed collateral loan'') would be subject to Regulation U
and any OTC options that secure such a loan have no loan value under
the current version of Regulation U.
---------------------------------------------------------------------------
[[Page 2843]]
2. Mutual Funds
Although most mutual funds are covered by the definition of margin
stock in Regulation U, the Board has long excluded mutual funds that
have at least 95 percent of its assets continuously invested in
exempted securities.11 In a separate document published
elsewhere in today's Federal Register, the Board is excluding money
market mutual funds from the definition of margin stock in Regulation U
as well. The Board is soliciting comment on whether it should propose
additional exclusions from the definition of margin stock for mutual
funds which invest almost exclusively in securities entitled to good
faith loan value under Regulation T, such as corporate bond funds.
---------------------------------------------------------------------------
\11\ The definition of margin stock is found in Sec. 221.2 of
Regulation U.
---------------------------------------------------------------------------
C. Exempted Transactions
The Board extended Regulation U to cover lenders formerly subject
to Regulation G because the National Securities Market Improvement Act
eliminated the distinction between bank and nonbank lenders with
respect to loans to broker-dealers. The Board now permits bank and
nonbank lenders to make loans to broker-dealers on the same basis,
including the exemptions contained in Sec. 221.5, ``Special purpose
loans to brokers and dealers.'' Banks are also permitted to make
unregulated loans to persons other than broker-dealers pursuant to
Sec. 221.6, ``Exempted transactions.'' The only one of the eight
exemptions listed in Sec. 221.6 was contained in former Regulation G:
loans to employee stock ownership plans (ESOPs) qualified under section
401 of the Internal Revenue Code. This exemption, formerly found in
Sec. 207.5(c) of Regulation G, has been retained for nonbank lenders in
Sec. 221.4(c) of Regulation U. The Board is soliciting comment on
whether it should propose to extend the exemptions for banks in
Sec. 221.6 of Regulation U to nonbank lenders as well. The Board seeks
comment on whether it should propose to consolidate the exemption for
loans to ESOPs with loans to ``plan lenders'' as defined in
Sec. 221.4(b) of Regulation U.
III. Regulation X
Regulation X (``Borrowers of securities credit'') implements
section 7(f) of the '34 Act, which applies the margin requirements to
borrowers.12 Most of the language in Regulation X is taken
directly from the statute. If the Board were to repeal Regulation X,
section 7(f) would still apply to borrowers of securities credit. The
only substantive reason for the Board's adoption of a regulation
covering borrowers is to exercise its authority under section 7(f)(3)
of the '34 Act to exempt persons from the application of section 7(f).
These exemptions are found in Secs. 224.1(b)(1), (b)(2) and (b)(3) of
Regulation X.
---------------------------------------------------------------------------
\12\ In contrast, the Board's other margin regulations were
adopted under the authority of sections 7(c) and 7(d) of the '34 Act
and apply to lenders of securities credit.
---------------------------------------------------------------------------
A. National Securities Markets Improvement Act
In response to the Board's request for comment on appropriate
amendments to its margin regulations to reflect the statutory changes
contained in NSMIA, two commenters expressed concern that foreign
affiliates of exempt U.S. broker-dealers continue to be subject to
Regulation X (because they are ``foreign persons controlled by a U.S.
person'') and their borrowings therefore have to comply with Regulation
U, while the borrowings of their parent would not be subject to Board
regulation. The commenters urged the Board to exempt foreign broker-
dealer affiliates of exempt U.S. broker-dealers from Regulation X. The
Board seeks comment on whether it should propose such an amendment.
B. Periodic Review
In conjunction with its periodic review of the margin regulations,
and the requirements of section 303 of the Riegle Community
Redevelopment and Regulatory Improvement Act of 1994, the Board is
requesting comment on other appropriate amendments to Regulation X to
reduce unnecessary regulatory burden.
IV. All Regulations
A. Definition of National Securities Exchange
The Board's margin regulations have always covered all equity
securities registered on a national securities exchange. Although the
phrase ``national securities exchange'' is not defined in the Board's
margin regulations or section 3(a) of the Securities Exchange Act of
1934,13 the Board has understood the term to mean a
securities exchange registered with the Securities and Exchange
Commission (SEC) under section 6 of the '34 Act (``National securities
exchanges;'' 15 U.S.C. 78f). The Board is soliciting comment on whether
it should propose to add a definition of the phrase ``national
securities exchange'' into Regulations T and U.
---------------------------------------------------------------------------
\13\ Definitions found in section 3(a) of the '34 Act are
incorporated by cross-reference in the Board's margin regulations.
---------------------------------------------------------------------------
B. Purpose Statements as Model Forms
The Board has established three purpose statements (FR G-3, FR T-4,
and FR U-1) for the three types of lenders covered under its securities
credit regulations. Lenders other than broker-dealers are specifically
required by the Board's regulation to obtain the FR G-3 and FR U-1 in
certain circumstances. However, Regulation T does not refer to the FR
T-4 and states only that in certain circumstances a broker-dealer shall
accept ``a written statement'' that ``shall conform to the requirements
established by the Board.''
The Board is requesting comment on the continuing need for purpose
statements, the form of which is prescribed by regulation, or whether
model forms would serve the Board's purposes, or whether the form of
the statement should be left to the affected institution or its
regulatory supervisors.
C. Repurchase of Securities by Issuer
The Board held in 1962 that credit extended to an issuer to
repurchase its own securities for immediate retirement is not purpose
credit subject to the Board's margin requirements.14 The
1962 interpretation states that ``[i]t should not be regarded as
governing any other situations; for example, the interpretation does
not deal with cases where securities are being transferred * * * to the
issuer for a purpose other than immediate retirement. Whether the
margin requirements are inapplicable to any such situations would
depend upon the relevant facts of actual cases presented.'' Three
commenters requested that this interpretation be expanded to cover all
credit extended to an issuer to repurchase its securities. While the
interpretation requires immediate retirement of the securities
repurchased, this limitation can be circumvented by having the issuer
retire the securities it repurchases and then reissue those or similar
securities later. The Board is soliciting comment on whether it should
propose to incorporate its 1962 interpretation into Regulations T and U
and whether the coverage of the interpretation should be broadened.
---------------------------------------------------------------------------
\14\ 12 CFR 220.119, reprinted in the Federal Reserve Regulatory
Service at 5-490.
---------------------------------------------------------------------------
D. Forward Transactions
Commenters in earlier dockets and members of the securities bar and
industry have requested guidance from the Board on the proper treatment
of forward purchases and sales of
[[Page 2844]]
securities. Forwards on nonequity and exempted securities are permitted
in the good faith account in Regulation T and are not covered by
Regulation U. The Board is soliciting comment on whether and how it
should amend Regulations T and U to address transactions involving
forward purchases and sales of equity securities.
By order of the Board of Governors of the Federal Reserve
System, December 18, 1997.
William W. Wiles,
Secretary of the Board.
[FR Doc. 98-885 Filed 1-15-98; 8:45 am]
BILLING CODE 6210-01-P