FEDERAL RESERVE BOARD ADOPTS AMENDMENTS TO REG T SHORTENING PERIOD FOR CUSTOMER PAYMENT FOR SECURITIES

December 2, 1994 TO: ACCOUNTING/TREASURERS MEMBERS No. 37-94 BANK BROKER/DEALER ADVISORY COMMITTEE No. 27-94 BROKER/DEALER ADVISORY COMMITTEE No. 24-94 BROKER/DEALER ASSOCIATE MEMBERS No. 19-94 CLOSED-END FUND COMMITTEE No. 32-94 INSURANCE BROKER-DEALER ADVISORY COMMITTEE No. 13-94 OPERATIONS MEMBERS No. 38-94 SEC RULES MEMBERS No. 86-94 SMALL FUNDS MEMBERS No. 13-94 TRANSFER AGENT ADVISORY COMMITTEE No. 47-94 UNIT INVESTMENT TRUST COMMITTEE No. 80-94 RE: FEDERAL RESERVE BOARD ADOPTS AMENDMENTS TO REG T SHORTENING PERIOD FOR CUSTOMER PAYMENT FOR SECURITIES ______________________________________________________________________________ The Board of Governors of the Federal Reserve System has adopted amendments to Regulation T, which governs extensions of credit by brokers or dealers. The amendments, which include a requirement that customers meet initial margin calls or make full cash payment for securities purchased at a broker/dealer within two business days of the standard settlement period in the U.S., became effective on November 25, 1994. In practice the time period within which customers must meet margin calls and pay for securities will not change until June 7, 1995 when SEC Rule 15c6-1, which shortens the standard settlement period for securities transactions from five to three business days, becomes effective. A copy of the adopting release is attached. Related amendments raise the de minimis amount below which liquidation of unpaid transactions is not required from $500 to $1,000 and require brokers seeking extensions of the payment period to obtain them from their designated examining authority (e.g., the NYSE or the NASD). The Board also made certain technical amendments concerning payment for foreign securities. Regulation T was also amended to exclude government securities brokers and dealers who register with the SEC under Section 15C of the Securities Exchange Act of 1934 from the definition of "creditor" in Regulation T. In addition, general broker/dealers effecting customer transactions that could be effected by a Section 15C broker/dealer will be able to record the transactions in a new government securities account to which the other restrictions in Regulation T would not apply. Diane M. Butler Director - Operations & Fund Custody Attachment