Fed to Change Margin Rules

WASHINGTON - The Federal Reserve Board approved a change in regulations Wednesday that will make it easier for banks to buy and sell margin loans on securities when the market value of their collateral drops below the 50% requirement.

Banks currently may not sell such loans to insurance companies or other nonbank lenders. They can sell the loans to other banks, however.

Effective Oct. 11

The amendments to the central bank's regulations G and U, which will take effect Oct. 11, permit banks to sell such loans - or portions of the loans - to nonbank lenders, provided certain conditions are met.

The sale would be permitted if the size of the credit has not increased, the collateral has not changed, and the sale is not for the purpose of evading margin requirements.

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