(a) Requirements. In a broker-dealer credit account, a creditor
may effect or finance transactions in accordance with the following
provisions.
(b) Purchase
or sale or security against full payment. A creditor may purchase
any security from or sell any security to another creditor or person
regulated by a foreign securities authority under a good faith agreement
to promptly deliver the security against full payment of the purchase
price.
(c) Joint back
office. A creditor may effect or finance transactions of any
of its owners if the creditor is a clearing and servicing broker or
dealer owned jointly or individually by other creditors.
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(d) Capital contribution. A creditor
may extend and maintain credit to any partner or stockholder of the
creditor for the purpose of making a capital contribution to, or purchasing
stock of, the creditor, affiliated corporation or another creditor.
(e) Emergency and subordinated
credit. A creditor may extend and maintain, with the approval
of the appropriate examining authority—
(1) credit to meet the emergency needs
of any creditor; or
(2) subordinated credit to another creditor for capital purposes,
if the other creditor—
(i) is an affiliated corporation or
would not be considered a customer of the lender apart from the subordinated
loan; or
(ii) will
not use the proceeds of the loan to increase the amount of dealing
in securities for the account of the creditor, its firm or corporation
or an affiliated corporation.
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(f) Omnibus credit.
(1) A creditor may effect and finance transactions
for a broker or dealer who is registered with the SEC under section
15 of the act and who gives the creditor written notice that—
(i) all
securities will be for the account of customers of the broker or dealer;
and
(ii) any short
sales effected will be short sales made on behalf of the customers
of the broker or dealer other than partners.
(2) The written notice required
by paragraph (f)(1) of this section shall conform to any SEC rule
on the hypothecation of customers’ securities by brokers or dealers.
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(g) Special-purpose credit. A creditor may extend the following types of credit with good faith
margin:
(1) credit to finance the
purchase or sale of securities for prompt delivery, if the credit
is to be repaid upon completion of the transaction;
(2) credit to finance securities in transit
or surrendered for transfer, if the credit is to be repaid upon completion
of the transaction;
(3) credit to enable a broker or dealer to pay for securities, if
the credit is to be repaid on the same day it is extended;
(4) credit to an exempted
borrower;
(5) credit
to a member of a national securities exchange or registered broker
or dealer to finance its activities as a market maker or specialist;
and
(6) credit to a
member of a national securities exchange or registered broker or dealer
to finance its activities as an underwriter.
