(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.
(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.
(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.
(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.
(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.
(6) Credit to a member of a national securities exchange or registered broker or dealer to finance its activities as an underwriter.
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