Regulation U
- A rule established by the Federal Reserve System's Board of Governors that places limits on the amount of credit that banks can give for the purchase or holding of margin stock, especially when the loan is secured through that same stock
- Due to Regulation U, the bank could not provide the requested credit to the client as it exceeded the limit set for margin stock loans.
- When a loan is secured by margin stocks, Regulation U imposes certain credit restrictions on banks.
- To adhere to Regulation U, banks must be cautious when extending credit for buying or carrying margin stock.
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