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#2231407 - 02/20/20 07:16 PM Regulation U - Gold ETF's
awilli Offline
Gold Star
Joined: Oct 2014
Posts: 291
Are Gold ETF's considered Margin Stock per Regulation U?

Loan purpose is to purchase Gold ETF's, and the loan is secured by other stock (not the ETF) in an account with our bank. Trying to determine if this is considered a "purpose" or "non-purpose" transaction.
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Lending Compliance
#2231410 - 02/20/20 07:41 PM Re: Regulation U - Gold ETF's awilli
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,371
Galveston, TX
Most ETF's are marginable.
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#2231412 - 02/20/20 07:45 PM Re: Regulation U - Gold ETF's awilli
awilli Offline
Gold Star
Joined: Oct 2014
Posts: 291
I wouldn't think that a Gold ETF is considered an "equity security".
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#2232350 - 03/04/20 09:03 PM Re: Regulation U - Gold ETF's awilli
awilli Offline
Gold Star
Joined: Oct 2014
Posts: 291
Bringing this back up...

Let's assume that this ETF is marginable and considered equity security. The purpose of the loan will be to purchase this ETF, but the loan will NOT be secured by this ETF. However, the loan will be secured by other stock.

Does that make this a "purpose" transaction and trigger Reg U documentation and restrictions?
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#2232353 - 03/04/20 09:13 PM Re: Regulation U - Gold ETF's awilli
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 83,371
Galveston, TX
Purpose Credit is any credit for the purpose, whether immediate, incidental, or ultimate, of buying or carrying margin stock.

Any loan exceeding $100,000 that is directly or indirectly secured by any marginable securities trigger a purpose statement (U-1).
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com

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