What is Reg-T?
Reg-T is a US regulation from the Federal Reserve Board governs the amount of credit that brokerage firms and dealers may extend to customers subject to US laws for the purchase of securities.
It limits the amount of credit for the purchase of securities to 50% (2 to 1 ) for trades. There are two related regulations you have to examine to understand Reg-T, Reg-X and Reg-U
Reg-U concerns non broker dealers who loan money for the purchase of securities such as banks.
Reg-T concerns broker dealers who extend credit , including all members of national securities exchanges.
Reg-X concerns people who borrow money to purchase securities. It ‘applies’ Reg T and Reg U to those who are subject to US laws even if the credit is obtained outside the United States.
Regulation T is formally called 12 CFR 220 which is title 12 of the Code of Federal Regulation, part 220.
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[...] is exempt from Reg-T ? 10. April 2008 | FAQ | Permalink Certain borrowers are exempt from Regulation-T, which means those borrowres can obtain a leverage higher that 50% ( 2 to 1 [...]