1 See Memorandum to SEC Rules Committee No. 132-95, dated December 22, 1995.
February 22, 1996
TO: SEC RULES COMMITTEE No. 12-96
RE: INSTITUTE COMMENTS ON PROPOSED AMENDMENTS TO REGULATION U
______________________________________________________________________________
As we previously informed you, the Federal Reserve Board recently proposed
amendments to Regulation U (governing extensions of credit by banks that are secured by
margin stocks).1 Some of the amendments are designed to conform Regulation U to certain
changes that earlier were proposed for Regulation T (governing extensions of credit by brokers
and dealers).
The Institute has filed a comment letter with the Board expressing support for the
proposed changes to Regulation U that would: (1) provide that securities issued by a money
market mutual fund are entitled to good faith loan value where a bank extends credit that is
secured by such securities; and (2) import into Regulation U the definition of "cash equivalent"
from Regulation T (as proposed to be amended to include securities issued by money market
mutual funds). The letter notes that the Institute supported the corresponding proposed
amendments to Regulation T, and that we believe parity among the Boards regulations is
appropriate. A copy of the Institutes comment letter is attached.
Frances M. Stadler
Associate Counsel
Attachment