Reg U coverage triggers
by Mary Beth Guard and John Burnett Guru BIOS
Question: Do margin requirements imposed under Regulation U only apply to credits that exceed $100,000 and which are both secured by margin stock
and for the purpose of buying or carrying margin stock?
As a follow-up/related question, and assuming that margins requirements apply to credits under of any amount,
how should you document a purpose loan if the regulation only requires the U-1 form for credits over $100,000?
Answer: All loans in excess of $100,000 and secured directly or indirectly by margin stock must be
documented with a form U-1, regardless of purpose (12 CFR 221.3(c)). However, the restrictions as to margin requirement only apply to “purpose”
credit, as you suggest.
You may use whatever documentation you prefer for purpose loans of under $100,000. But don’t forget that BSA regulations require that you document the
purpose of any loan over $10,000 not secured by real estate.
The original version appeared in the September/October 2004 edition of the Oklahoma Bankers Association Compliance Informer.
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