WASHINGTON -- The Federal Reserve Board on Monday proposed shortening the time customers are allowed to pay for securities or meet initial margin calls under Regulation T.

While not finished weighing possible changes in the rule, the Fed decided to go ahead with this proposal to bring bank rules in line with market practices. Keyed to Settlement Period Currently, Fed rules require payment within seven business days of the trade date, or two days beyond the standard settlement period of five business days. The Fed is proposing to amend Regulation T to change "seven business days" to "two business days after the standard settlement period."

While this change would not affect enforcement of Regulation T right now, it would shorten the payment period by two days come June 1995, when a Securities and Exchange Commission rule cuts the standard settlement period to three days.

The Fed also proposed a related change to Regulation T that would exempt brokers and dealers who limit their business to government securities markets.

The latter change is designed to reduce regulatory burden by eliminating duplicative rules. The Government Securities Act Amendments of 1993 gave the Treasury Department rulemaking authority over government securities brokers and dealers, so the Fed is bowing out.

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