12 CFR 220.7 - Broker-dealer credit account.
(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 of 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.
(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) 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.
(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.
(6) Credit to a member of a national securities exchange or registered broker or dealer to finance its activities as an underwriter.
- 12 CFR 220.123 — Partial Delayed Issue Contracts Covering Nonconvertible Bonds.
- 12 CFR 220.111 — Arranging for Extensions of Credit to Be Made by a Bank.
- 12 CFR 220.124 — Installment Sale of Tax-Shelter Programs as “arranging” for Credit.
- 12 CFR 220.122 — “Deep in the Money Put and Call Options” as Extensions of Credit.