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Reg U - Purpose Loan Vs Non-Purpose Loan

Answered by: 
Kathleen Blanchard | CRCM

Question: 
What is the difference under Reg U between a purpose loan and a non-purpose loan when adhering to margin requirements as a non-bank lender?
Answer: 

A purpose loan under Reg U is limited to a 50% advance on the margin stock whether the lender is a bank or a non-bank lender. For non-purpose loans, the advance rate is set by the lenders loan policies.

First published on BankersOnline.com 5/04/09

First published on 05/04/2009

Filed under: 
Compliance
Filed under compliance as: 
Loans
Margin Stock
Policies

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