The Federal Reserve Board today published a revised list of over-the-counter (OTC) market stocks that are subject to its margin regulations (OTC List). Also published today is a revised list of foreign equity securities that meet the margin criteria in Regulation T (Foreign List). The Lists are effective November 10, 1997, and supersede the previous Lists that were effective August 11, 1997. The next revision of these Lists is scheduled to be effective February, 1998. These Lists are published for the information of lenders and the general public. The changes that have been made to the revised OTC List, which now contains 4,880 OTC stocks, are as follows: 165 stocks have been included for the first time, 143 under National Market System (NMS) designation; 52 stocks previously on the List have been removed for substantially failing to meet the requirements for continued listing; 115 stocks have been removed for reasons such as listing on a national securities exchange or involvement in an acquisition. 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. The Foreign List is composed of foreign equity securities that are eligible for margin treatment at broker-dealers. Effective July 1, 1996, foreign stocks that have a "ready market" for purposes of the Securities Exchange Commission's (SEC) net capital rule may be included on the Foreign List. The SEC effectively treats all stocks included on the Financial Times/Standard & Poor's Actuaries World Indices (FT/S&P-AW Indices) as having a "ready market" for capital purposes. The Board is adding 10 foreign stocks and deleting 30, based on changes to the FT/S&P-AW Indices. The revised Foreign List now contains 1,956 securities displayed in country order. Margin regulations generally limit the amount of credit a person or firm may obtain to buy or carry stock. Stocks on the OTC List and the Foreign List are subject to the same margin requirements (currently 50 percent) as stocks listed on national securities exchanges in the United States. This means a person or firm buying a stock on credit must make a down payment equal to at least 50 percent of the purchase price of the stock and may obtain credit for the remaining 50 percent. 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. Credit extended by banks and other lenders on foreign stocks or OTC stocks that are neither on the OTC List nor in the NMS group need only conform to the good faith lending limitation contained in Regulations G and U. It is unlawful for any person to cause any representation to be made that inclusion of a stock on the OTC List or the Foreign List indicates that the Board or the Securities and Exchange Commission has in any way passed upon the merits of any such stock or transaction therein. Any references to the Board in connection with these Lists or any stocks thereon in any advertisement or similar communications is unlawful.

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1997 Banking and consumer regulatory policy