WASHINGTON - Federal Reserve Board Chairman Alan Greenspan urged Congress on Thursday to repeal a law requiring down payments on loans used to buy securities.

Known as the margin requirement, this Depression-era law was intended to limit speculation in stocks, protect unsophisticated investors, and forestall extensive fluctuations in the market.

Mr. Greenspan told a House Commerce subcommittee that universal margin requirement "is not the best way" to achieve those policy objectives.

Rather, the Securities and Exchange Commission and self-regulated organizations such as the New York Stock Exchange should set their own margin requirements that more accurately reflect market risks, he said.

The banking agencies would take care of financial institutions, examining them to ensure that their stock loans are made in a safe and sound manner, according to Mr. Greenspan.

Currently, the Fed sets the margin requirements for all lenders. It has stood at 50% since 1974, and has never fallen below 40%.

Mr. Greenspan conceded that the Fed's proposal would mean different institutions were subject to varying stock loan rules, but said the effect on competition would be minor.

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