What Is Regulation R? Regulation R was implemented in 2007 as a provision of the Gramm-Leach-Bliley Act of 1999. The Gramm-Leach-Bliley Act focuses on regulations for broker-dealers and brokerage transactions. Regulation R provides exceptions for banks to offer certain brokerage services once defined in the Securities Exchange Act of 1934. Broker-Dealer A broker-dealer is an
What Is Regulation T? Regulation T is a collection of provisions that govern investors’ cash accounts and the amount of credit that brokerage firms and dealers may extend to customers for the purchase of securities. According to Regulation T, an investor may borrow up to 50% of the purchase price of securities that can be
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. Securities involved typically include stocks, mutual funds, and
What Is Regulation V? Regulation V is a federal regulation that is intended to protect the confidential information of consumers. In particular, it aims to protect the privacy and accuracy of the information contained in consumer credit reports. The Federal Reserve adopted Regulation V in order to comply with the Fair Credit Reporting Act (FCRA)
What Is Regulation W? Regulation W is a U.S. Federal Reserve System (FRS) regulation that limits certain transactions between depository institutions, such as banks and their affiliates. In particular, it sets quantitative limits on covered transactions and requires collateral for certain transactions. The regulation applies to banks that are members of the Fed, insured state
What Is Regulation X? Regulation X is a rule, issued by the Board of Governors of the Federal Reserve System (FRS), that governs credit limits granted to foreign persons or organizations for the purchases of U.S. Treasuries, like T-bonds. The term regulation X may also refer to a regulation covering real estate transactions issued by
What Is Regulation Y? Regulation Y is a Federal Reserve action that regulates corporate bank holding company practices as well as certain practices of state-member banks. Practices or issues that fall under Regulation Y governance include the establishment of minimum capital reserves (ratio of reserves to assets) for bank holding companies, certain bank holding company transactions
What Is Regulatory Risk? Regulatory risk is the risk that a change in laws and regulations will materially impact a security, business, sector, or market. A change in laws or regulations made by the government or a regulatory body can increase the costs of operating a business, reduce the attractiveness of an investment, or change the competitive
What Is Regulatory Capture? Regulatory capture is an economic theory that says regulatory agencies may come to be dominated by the industries or interests they are charged with regulating. The result is that an agency, charged with acting in the public interest, instead acts in ways that benefit incumbent firms in the industry it is supposed
What Is Rehypothecation? Rehypothecation is a practice whereby banks and brokers use, for their own purposes, assets that have been posted as collateral by their clients. Clients who permit rehypothecation of their collateral may be compensated either through a lower cost of borrowing or a rebate on fees. In a typical example of rehypothecation, securities
