The Fed Writes Regulation T

Rule 8 of 11 in this unit1.1.3

1.1.3 Other Regulators and Agencies

SIE outline 1.1.3

12 CFR 220, credit by brokers and dealers. Sets 50% as a floor, not a fixed number. NOT a FINRA or SEC rule.

The method for this kind of question

Name the agency, then the one number

Now answer

1 question on this screen, from this outline item's own pool, so some will test a rule you met earlier in the unit. Pick an answer, say how sure you are, then reveal. Being sure and wrong is the most useful thing that can happen here, and the coach treats it that way.

Question 1Exam level

Which statement about Regulation T is correct?

A. Written by FINRA, sets a 50 percent ceiling B. Written by the Federal Reserve Board of Governors, sets 50 percent as a floor C. Written by the SEC, sets 25 percent as a floor D. Written by the Fed, a fixed 50 percent with no exceptions

How sure are you?

Sure Fairly sure Guessing

Correct: B. The Fed's Board of Governors issues Regulation T, and its 50 percent requirement is a floor, not a fixed ceiling.

A. FINRA does not write Regulation T, and "ceiling" reverses the direction of the rule. 50 percent is where it starts, not where it stops.

C. Neither the author nor the number is right. It's the Fed, not the SEC, and the figure is 50 percent, not 25.

D. Gets the author right but the mechanics wrong. A local regulatory authority can require more than 50 percent; the rule names 50 as the floor "or higher."

Unit: SIE outline 1.1.3

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