Memo #
7163
DRAFT COMMENT LETTER ON PROPOSED AMENDMENTS TO REGULATION T CONCERNING MARGIN TREATMENT OF INVESTMENT COMPANY SECURITIES
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1 See Memorandum to Closed-End Fund Committee No. 31-95, SEC Rules Committee No. 78-95 and Unit Investment Trust Committee No. 52-95, dated June 29, 1995.
August 2, 1995
TO: CLOSED-END FUND COMMITTEE No. 42-95
SEC RULES COMMITTEE No. 94-95
UNIT INVESTMENT TRUST COMMITTEE No. 63-95
RE: DRAFT COMMENT LETTER ON PROPOSED AMENDMENTS TO REGULATION T
CONCERNING MARGIN TREATMENT OF INVESTMENT COMPANY
SECURITIES
______________________________________________________________________________
As we recently reported, the Federal Reserve Board has proposed amendments to
Regulation T that, among other things, would liberalize the margin treatment of securities
issued by certain registered investment companies.1 Some of the proposed amendments are
based on recommendations made by the Institute in a September 1992 submission to the Board.
The attached draft letter expresses the Institutes support for the proposed changes
involving investment company securities. (Briefly, as previously indicated, these changes
would: (1) permit brokers and dealers to give "good faith" loan value to securities issued by
"exempted securities mutual funds," as proposed to be defined, and to money market funds;
and (2) treat money market funds as "cash equivalents" that may be used to cover put options
written in a customers cash account.) The letter also suggests several technical changes.
Comments on the proposed amendments must be filed by August 28th. Please contact
me at (202) 326-5822 by Friday, August 18th if you have any comments on the attached draft
letter.
Frances M. Stadler
Associate Counsel
Attachment