April 25, 1991
TO: UNIT INVESTMENT TRUST COMMITTEE NO. 19-91
RE: MARGIN REQUIREMENTS FOR SECURITIES ISSUED BY UNIT INVESTMENT
TRUSTS
__________________________________________________________
At the suggestion of several members of the Unit Investment
Trust Committee and as discussed at recent Committee meetings,
the Institute is considering submitting a request to the Federal
Reserve Board to amend the margin requirements currently
applicable to securities issued by unit investment trusts
pursuant to Regulation T and related Board interpretations.
Currently, UIT securities are treated as "margin equity
securities" eligible for 50 percent margin treatment. The
submission would propose generally that margin treatment for
securities issued by UITs be determined based on the nature of
the securities in the trust's portfolio. In most cases, this
would result in the ability to margin the securities to a greater
extent than is currently permitted.
We have asked Fulbright & Jaworski to assist us with this
project. They prepared the attached memorandum which describes
present margin requirements, contains a draft proposal for
change, discusses certain background information, and identifies
possible business reasons to justify the proposal.
After you have had an opportunity to review the Fulbright &
Jaworski memorandum (which was also distributed at the Committee
meeting earlier this week), please contact me if you have any
comments or suggestions.
We will keep you informed of developments.
Frances M. Stadler
Assistant General Counsel
Attachment