12 CFR 220.3 - General provisions.
(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:
(ii) Transfers may be effected between the margin account and the special memorandum account pursuant to §§ 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:
(2) Any security in an account ceasing to be margin or exempted; or
(3) Any change in the margin requirements prescribed under this part.
(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.
(i) Cash or any check, draft, or order payable on presentation; or
(ii) Any security with sight draft attached.
(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.
(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.
(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.
(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.
(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.
- 12 CFR 220.128 — Treatment of Simultaneous Long and Short Positions in the Same Margin Account When Put or Call Options or Combinations Thereof on Such Stock Are Also Outstanding in the Account.
- 12 CFR 220.119 — Applicability of Margin Requirements to Credit Extended to Corporation in Connection With Retirement of Stock.
- 12 CFR 220.121 — Applicability of Margin Requirements to Joint Account Between Two Creditors.
- 12 CFR 220.122 — “Deep in the Money Put and Call Options” as Extensions of Credit.