Regulation T governs the extension of credit by securities brokers and dealers in the United States. Its best-known function is the control of margin requirements for stocks bought on margin. The initial margin requirement for such margin stock purchases is currently 50%, and has been since 1974, but Regulation T gives the Federal Reserve the authority to change that percentage. Raising the margin requirement would reduce risk in the financial system by reducing the potential leverage and total buying power of investors. Lowering the margin requirement, conversely, would allow an increase in risk by expanding the buying power and leverage available to investors. Since 1974 the Federal Reserve has not deemed it necessary to adjust the margin requirement, despite numerous financial crises.
Fed wants quicker settlements. (Federal Reserve Board proposal would shorten time customers have to meet margin calls or to pay for securities under Regulation T) (Brief Article)
Jun 28, 1994; WASHINGTON -- The Federal Reserve Board on Monday proposed shortening the time customers are allowed to pay for securities or...