Editorial Note on Part 220
Editorial Note: A copy of each form referred to in this part is filed as a part of the original document. Copies are available upon request to the Board of Governors of the Federal Reserve System or any Federal Reserve Bank.

§ 220.7 Broker-dealer credit account. ( a ) *Requirements.* In a broker-dealer credit account, a creditor may effect or finance transactions in accordance with the following provisions.
( b ) *Purchase or sale of security against full payment.* A creditor may purchase any security from or sell any security to another creditor or person regulated by a foreign securities authority under a good faith agreement to promptly deliver the security against full payment of the purchase price.
( c ) *Joint back office.* A creditor may effect or finance transactions of any of its owners if the creditor is a clearing and servicing broker or dealer owned jointly or individually by other creditors.
( d ) *Capital contribution.* A creditor may extend and maintain credit to any partner or stockholder of the creditor for the purpose of making a capital contribution to, or purchasing stock of, the creditor, affiliated corporation or another creditor.
( e ) *Emergency and subordinated credit.* A creditor may extend and maintain, with the approval of the appropriate examining authority: ( 1 ) Credit to meet the emergency needs of any creditor; or
( 2 ) Subordinated credit to another creditor for capital purposes, if the other creditor: ( i ) Is an affiliated corporation or would not be considered a customer of the lender apart from the subordinated loan; or
( ii ) Will not use the proceeds of the loan to increase the amount of dealing in securities for the account of the creditor, its firm or corporation or an affiliated corporation.
( f ) *Omnibus credit* ( 1 ) A creditor may effect and finance transactions for a broker or dealer who is registered with the SEC under section 15 of the Act and who gives the creditor written notice that: ( i ) All securities will be for the account of customers of the broker or dealer; and
( ii ) Any short sales effected will be short sales made on behalf of the customers of the broker or dealer other than partners.
( 2 ) The written notice required by paragraph (f)(1) of this section shall conform to any SEC rule on the hypothecation of customers' securities by brokers or dealers.
( g ) *Special purpose credit.* A creditor may extend the following types of credit with good faith margin: ( 1 ) Credit to finance the purchase or sale of securities for prompt delivery, if the credit is to be repaid upon completion of the transaction.
( 2 ) Credit to finance securities in transit or surrendered for transfer, if the credit is to be repaid upon completion of the transaction.
( 3 ) Credit to enable a broker or dealer to pay for securities, if the credit is to be repaid on the same day it is extended.
( 4 ) Credit to an exempted borrower.
( 5 ) Credit to a member of a national securities exchange or registered broker or dealer to finance its activities as a market maker or specialist.
( 6 ) Credit to a member of a national securities exchange or registered broker or dealer to finance its activities as an underwriter.
[Reg. T, 63 FR 2824, Jan. 16, 1998]