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Technology Stocks : Information Architects (IARC): E-Commerce & EIP
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To: Jeffrey S. Mitchell who wrote (3162)11/8/1997 11:38:00 PM
From: Jeffrey S. Mitchell  Read Replies (1) of 10786
 
Re: Will ALYD be marginable immediately on the NMS?

I'm writing this post to myself because I'm confused about this question. It was my understanding that all securities had to be approved for marginability by the Federal Reserve Board. However, from what I can find on the web, this all changed on November 20, 1996 with the passing of the Markets Improvement Act:

Under the Markets Improvement Act, the Board no longer has the authority to regulate certain loans to registered broker-dealers unless it finds that such rules are necessary or appropriate in the public interest or for the protection of investors.

Link: bog.frb.fed.us

This was made clearer to me when I read this:
The OTC List is composed of OTC stocks that have been determined by the Board to be subject to margin requirements in Regulations G, T and U. It includes OTC stocks qualifying under Board criteria and also includes all OTC stocks designated as NMS securities. Additional NMS securities may be added in the interim between quarterly Board publications; these securities are immediately marginable upon designation as NMS securities.

...These margin requirements are only applicable to credit extended on OTC or foreign stocks after they are placed on the Lists and the Lists have become effective or the stocks are designated as NMS securities. No credit may be extended by broker-dealers on stocks that are not traded on a national securities exchange unless they are on the OTC List, the Foreign List, or in the NMS group.

Link: bog.frb.fed.us

Conclusion: ALYD will be marginable immediately upon approval as an NMS stock.

But isn't there some sort of 30 day waiting period or something like that? Can anybody out there shed more light on this?

- Jeff
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