Margin Requirements.
Section 23
SEC. 23. Margin Requirements. —(a) For the purpose of preventing the excessive use of credit for the puchase or carrying of securities, the Commission, in accordance with the credit and monetary policies that may be promulgated from time to time by the Monetary Board, shall prescribe rules and regulations with respect to the amount of credit that may be extended on any security other than an exempted security. For the extension of credit, such rules and regulations shall be based upon the following standard: An amount not greater than whichever is the higher of— Sixty-five (65%) per centum of the current market price of the security, or One hundred (100%) per centum of the lowest market price of the security during the preceding thirty-six calendar months, but not more than seventy-five (75%) per centum of the current market price. However, the Monetary Board, by an affirmative vote of five (5) of its members, may increase or decrease the above percentages, in order to achieve the objectives of the Central Bank during an economic crisis or national emergency. Such rules and regulations may make appropriate provision with respect to the carrying of undermargined accounts for limited periods and under specified conditions; the withdrawal of funds or securities; the transfer of accounts from one lender to another; special or different margin requirements for delayed deliveries, short sales, arbitrage transactions, and securities to which number 2 of the second paragraph of this subsection does not apply; the bases and methods to be used in calculating loans, and margins and market prices; and similar administrative adjustments and details. (b) It shall be unlawful for any member of an exchange or any broker or dealer, directly or indirectly, to extend or maintain credit or arrange for the extension or maintenance of credit to or for any customer— On any security other than an exempted security, in contravention of the rules and regulations which the Commission shall prescribe under subsection (a) of this Section; Without collateral or on any collateral other than securities, except (i) to maintain any credit initially extended in conformity with the rules and regulations which the Commission and (ii) in cases where the extension or maintenance of credit is not for the purpose of purchasing or carrying securities or of evading or circumventing the provisions of subparagraph (1) of this subsection. (c) It shall be unlawful for any person not subject to subsection (b) hereof to extend or maintain credit or to arrange for the extension or maintenance of credit for the purpose of purchasing or carrying any security, in contravention of such rules and regulations as the Commission shall prescribe to prevent the excessive use of credit for the purchasing or carrying of or trading in securities in circumvention of the other provisions of this Section. Such rules and regulations may imposed upon all loans made for the purpose of purchasing or carrying securities limitations similar to those imposed upon members, brokers, or dealers by subsection (b) of this Section and the rules and regulations thereunder. This subsection and the rules and regulations thereunder shall not apply (i) to a credit extension made by a person not in the ordinary course of business, (ii) to a credit extension on an exempted security, (iii) to a loan to a dealer to aid in the financing of the distribution of securities to customers not through the medium of a securities exchange (iv) to a credit extension by a bank on a collateral other than an equity security, or (v) to such other credit extension as the Commission shall, by such rules and regulations as it may deem necessary or appropriate in the public interest, or for the protection of investors exempt, either unconditionally or upon specified terms and conditions or for stated periods, from the operation of this subsection and the rules and regulations thereunder. (18a)