Get Federal Reserve Report Forms U 1

The FR U-1 statement is for recordkeeping requirements that must be met before credit is extended. The lender must retain the records for three years after the credit is extinguished.

Regulation U requires that when a credit union makes a loan for the purpose of buying or carrying margin stock and is secured by the stock, the maximum amount of the loan may not exceed 50 percent of the value of the collateral.

Reg T primarily governs the extension of credit to a margin customer by a broker dealer, while Reg U addresses the potential “loophole” of an investor utilizing commercial bank credit to finance trading activities.

This form must be retained by the lender for three years after the credit is extinguished.

Reg T primarily governs the extension of credit to a margin customer by a broker dealer, while Reg U addresses the potential “loophole” of an investor utilizing commercial bank credit to finance trading activities.

What Is Regulation U? Regulation U is a Federal Reserve Board regulation that governs loans by entities involving securities as collateral and the purchase of securities on margin. Regulation U limits the amount of leverage that can be extended for loans secured by securities for the purpose of buying more securities.

Regulation U, adopted in 1936, imposes limits on commercial bank loans to purchase and carry margin stock. Regulation G, adopted in 1968 but merged into Regulation U in 1998, limited non- bank purpose lending on margin stock.

Regulation U (12 CFR 221) imposes restrictions on lenders that extend credit for the purpose of purchasing or carrying margin stock if the credit is secured by margin stock (directly or indirectly).