The most recently promulgated
margin rule, Regulation X (12 CFR 224), “Borrowers of Securities Credit,”
became effective November 1, 1971. Regulation X applies, in general,
to U.S. persons who borrow outside the United States for the purpose
of purchasing or carrying United States securities. Also covered are
foreign persons controlled by, or acting on behalf of, U.S. persons.
In addition, Regulation X covers persons borrowing within the United
States, if they willfully cause credit to be extended in violation
of Regulation T or U.
Regulation X was promulgated under the authority of title
III of Public Law 91-508, a 1970 amendment that added section 7(f)
to the Securities Exchange Act of 1934. The purpose of section 7(f)
was to prevent the infusion of unregulated credit into U.S. securities
markets by U.S. borrowers who were circumventing the margin requirements
by borrowing from foreign lenders. It was Congress’s belief that destabilizing
credit flows could occur if U.S. borrowers were free to borrow abroad
in excess of the Federal Reserve margin requirements.
Margin Requirements
1 for Credit Extended Under Regulation X
Margin Requirements
for Credit Extended Under Regulation X
| Percent of Market Value |
| Effective date |
Margin stocks |
Convertible
bonds |
| 1934—Oct. 1 |
25-45 |
— |
| 1936—Feb. 1 |
25-55 |
— |
| Apr. 1 |
55 |
— |
| 1937—Nov. 1 |
40 |
— |
| 1945—Feb. 5 |
50 |
— |
| July 5 |
75 |
— |
| 1946—Jan. 21 |
100 |
— |
| 1947—Feb. 1 |
75 |
— |
| 1949—Mar. 3 |
50 |
— |
| 1951—Jan. 17 |
75 |
— |
| 1953—Feb. 20 |
50 |
— |
| 1955—Jan. 4 |
60 |
— |
| Apr. 23 |
70 |
— |
| 1958—Jan. 16 |
50 |
— |
| Aug. 5 |
70 |
— |
| Oct. 16 |
90 |
— |
| 1960—July 28 |
70 |
— |
| 1962—July 10 |
50 |
— |
| 1963—Nov. 6 |
70 |
— |
| 1968—Mar. 11 |
70 |
50 |
| June 8 |
80 |
60 |
| 1970—May 6 |
65 |
50 |
| 1971—Dec. 6 |
55 |
50 |
| 1972—Nov. 24 |
65 |
50 |
| 1974—Jan. 3 |
50 |
50 |
1 Margin requirements
are the difference between the market value (100 percent) and the
maximum loan value of collateral as prescribed by the Board.
