(a) Records. The creditor shall maintain a record for each account
showing the full details of all transactions.
(b) Separation of accounts.
(1) In general. The requirements of one account may not be met by considering items
in any other account. If withdrawals of cash or securities are permitted
under this part, written entries shall be made when cash or securities
are used for purposes of meeting requirements in another account.
(2) Exceptions. Notwithstanding paragraph (b)(1)
of this section—
(i) for purposes of calculating the
required margin for a security in a margin account, assets held in the good
faith account pursuant to section 220.6(e)(1)(i) or (ii) may serve
in lieu of margin;
(ii) transfers may be effected between the margin account and the
special memorandum account pursuant to sections 220.4 and 220.5.
(c) Maintenance of credit. Except as prohibited by this part, any
credit initially extended in compliance with this part may be maintained
regardless of—
(1) reductions in the customer’s equity
resulting from changes in market prices;
(2) any security in an account ceasing
to be margin or exempted; or
(3) any change in the margin requirements
prescribed under this part.
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(d) Guarantee of accounts. No guarantee of
a customer’s account shall be given any effect for purposes of this
part.
(e) Receipt of
funds or securities.
(1) A creditor, acting in good faith, may
accept as immediate payment—
(i) cash or any check,
draft, or order payable on presentation; or
(ii) any security with sight draft attached.
(2) A creditor
may treat a security, check, or draft as received upon written notification
from another creditor that the specified security, check, or draft
has been sent.
(3)
Upon notification that a check, draft, or order has been dishonored
or when securities have not been received within a reasonable time,
the creditor shall take the action required by this part when payment
or securities are not received on time.
(4) To temporarily finance a customer’s
receipt of securities pursuant to an employee benefit plan registered
on SEC Form S-8 or the withholding taxes for an employee stock award
plan, a creditor may accept, in lieu of the securities, a properly
executed exercise notice, where applicable, and instructions to the
issuer to deliver the stock to the creditor. Prior to acceptance,
the creditor must verify that the issuer will deliver the securities
promptly and the customer must designate the account into which the
securities are to be deposited.
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(f) Exchange of securities.
(1) To enable a customer to participate
in an offer to exchange securities which is made to all holders of
an issue of securities, a creditor may submit for exchange any securities
held in a margin account, without regard to the other provisions of
this part, provided the consideration received is deposited into the
account.
(2) If a nonmargin,
nonexempted security is acquired in exchange for a margin security,
its retention, withdrawal, or sale within 60 days following its acquisition
shall be treated as if the security is a margin security.
(g) Arranging for loans
by others. A creditor may arrange for the extension or maintenance
of credit to or for any customer by any person, provided the creditor
does not willfully arrange credit that violates parts 221 or 224 of
this chapter.
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(h) Innocent mistakes. If any failure to comply with this part results from a mistake made
in good faith in executing a transaction or calculating the amount
of margin, the creditor shall not be deemed in violation of this part
if, promptly after the discovery of the mistake, the creditor takes
appropriate corrective action.
(i) Foreign currency.
(1) Freely convertible foreign currency
may be treated at its U.S. dollar equivalent, provided the currency
is marked to market daily.
(2) A creditor may extend credit denominated
in any freely convertible foreign currency.
(j) Exempted borrowers.
(1) A member of a national securities exchange
or a registered broker or dealer that has been in existence for less
than one year may meet the definition of exempted borrower based on
a six-month period.
(2) Once a
member of a national securities exchange or registered broker or dealer
ceases to qualify as an exempted borrower, it shall notify its lender
of this fact before obtaining additional credit. Any new extensions
of credit to such a borrower, including rollovers, renewals, and additional
draws on existing lines of credit, are subject to the provisions of
this part.
