We do not believe that Regulation U would apply. The rule states that its restrictions apply to lenders that “extend credit for the purpose of buying or carrying margin stock.” 12 CFR 221.1. Therefore, Regulation U would not apply to a transaction in which the customer uses the stock as security for a loan (and is not using the loan proceeds to purchase margin stock).
Under Regulation U, may a customer pledge stock as security for a loan?
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