FRGTU_20210624_omb

Supporting Statement for the
Margin Credit Reports
(FR G-1, FR G-2, FR G-3, FR G-4, FR T-4, and FR U-1; OMB No. 7100-0011)
Summary
The Board of Governors of the Federal Reserve System (Board), under authority
delegated by the Office of Management and Budget (OMB), has extended for three years,
without revision, the Margin Credit Reports (OMB No. 7100-0011). This information collection
comprises the following six reports:
• Registration Statement for Persons Who Extend Credit Secured by Margin Stock (Other
Than Banks, Brokers, or Dealers) (FR G-1),
• Deregistration Statement for Persons Registered Pursuant to Regulation U (FR G-2),
• Statement of Purpose for an Extension of Credit Secured by Margin Stock by a Person
Subject to Registration Under Regulation U (FR G-3),
• Annual Report (FR G-4),
• Statement of Purpose for an Extension of Credit by a Creditor (FR T-4), and
• Statement of Purpose for an Extension of Credit Secured by Margin Stock (FR U-1).
The Margin Credit Reports relate to extensions of credit secured by margin stock. The
Board collects the information gathered by the Margin Credit Reports so that it may meet certain
obligations under the Securities Exchange Act of 1934 (the Act).
The estimated total annual burden for the Margin Credit Reports is 260 hours. The forms
and instructions are available on the Board’s public website at
https://www.federalreserve.gov/apps/reportforms/default.aspx.
Background and Justification
The Act authorizes the Board to regulate securities credit extended by brokers, dealers,
banks, and other lenders and directs the Federal Reserve to regulate the amount of credit that can
be extended on any security when the credit is used to purchase or carry securities. The Board
has implemented its authority under the Act through three regulations. Regulation X - Borrowers
of Securities Credit (12 CFR Part 224), which covers borrowers, does not contain any
collections of information. The other two regulations (Regulation T - Credit by Brokers and
Dealers (12 CFR Part 220) and Regulation U - Credit by Banks and Persons other than Brokers
or Dealers for the Purpose of Purchasing or Carrying Margin Stocks (12 CFR Part 221)), which
cover lenders, do contain collections of information.
The FR T-4, FR U-1, and FR G-3 are forms that implement recordkeeping requirements
for brokers and dealers, banks, and other lenders, respectively. The FR T-4 documents the
purpose of credit being extended when that credit is not to purchase, carry, or trade in securities
and the credit is in excess of that otherwise permitted under Regulation T. The FR G-3 and
FR U-1 document the purpose of loans secured by margin stock. For purposes of these forms,
margin stock is defined by Regulation U, and includes (1) stocks that are registered on a national
securities exchange or any over-the-counter security designated for trading in the National

Market System, (2) debt securities (bonds) that are convertible into such stocks, and (3) shares of
most mutual funds.
Certain lenders, as described below, that are not brokers, dealers, or banks making loans
secured by margin stock must register and deregister with the Federal Reserve using the FR G-1
and FR G-2, respectively, and must file an annual report (FR G-4) while registered. The FR G-1,
FR G-2, and FR G-4 reporting requirements collect data used to identify lenders subject to the
Board’s Regulation U to verify their compliance with the regulation and to monitor margin
credit.
The information collected by the FR G-1, FR G-2, FR G-3, FR G-4, FR T-4, and FR U-1
is not available from other sources.
Regulation T
Regulation T was adopted in 1934 pursuant to section 7 of the Act (15 U.S.C. § 78g) to
regulate extensions of credit by brokers and dealers. Section 7(c) of the Act prohibits the
extension of “purpose credit” (defined by Regulation T as credit for the purpose, whether
immediate, incidental, or ultimate, of buying or carrying margin stock) by a creditor if the credit
is unsecured, secured by collateral other than securities, or secured by any security (other than an
exempted security). Regulation T requires that a broker or dealer be aware of the circumstances
surrounding an extension of credit and be satisfied that the customer’s statement as to the use of
the credit is truthful, in order to ensure compliance with section 7(c) of the Act. Under
Regulation T an extension of credit made by a broker or dealer, other than an extension of credit
to effect and carry transactions in commodities or foreign exchange, is deemed to be purpose
credit unless, prior to extending the credit, the creditor accepts in good faith from the customer a
written statement that it is not purpose credit.
Regulation U
Regulation U was adopted in 1936 pursuant to section 7 of the Act to regulate extensions
of margin credit by banks. The former Regulation G was adopted pursuant to section 7 of the Act
in 1968 to impose similar restrictions on lenders other than brokers, dealers, and banks and was
merged into Regulation U in 1998. The FR G-1, FR G-2, FR G-3, and FR G-4 reporting forms
for nonbank lenders maintain the G designation even though Regulation G was merged into
Regulation U.
Description of Information Collection
Registration Statement for Persons Who Extend Credit Secured by Margin Stock (Other
Than Banks, Brokers, or Dealers) (FR G-1)
Section 221.3(b)(1) of Regulation U requires that the FR G-1 be submitted by every
person (other than commercial banks, brokers, or dealers) (nonbank lenders) not currently
registered when the amount of credit extended during a calendar quarter equals $200,000 or more
in credit secured directly or indirectly by collateral that includes any margin stock, or the amount

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of credit outstanding at any time during that calendar quarter equals $500,000 or more in credit
secured directly or indirectly by collateral that includes any margin stock. Information collected
on the registration statement consists of certain background questions, information regarding the
credit being extended, and dollar amounts of margin credit.
The registration statement remains in effect until an eligible nonbank lender electronically
submits a deregistration statement (FR G-2) to the Board, which is then sent to and approved by
the Federal Reserve Bank in whose district it resides.
The registration statement is required to enable the Federal Reserve to identify nonbank
lenders subject to Regulation U, to verify compliance with the regulation, and to monitor margin
credit. In addition, registered nonbank lenders can be subject to periodic review by the Board,
National Credit Union Administration, and Farm Credit Administration.
Deregistration Statement for Persons Registered Pursuant to Regulation U (FR G-2)
A registered nonbank lender may apply to deregister under section 221.3(b)(2) of
Regulation U if the lender has not, during the preceding six calendar months, had more than
$200,000 of margin-stock-secured credit outstanding. The deregistration statement collects
identification and contact information regarding the lender, as well as the authorizing officer’s
signature and title and the date. A nonbank lender who has deregistered must reregister if
subsequent lending volume exceeds the thresholds identified in Regulation U.
Annual Report (FR G-4)
The FR G-4 annual report requires all nonbank lenders registered pursuant to
Regulation U to provide the total amount of credit outstanding secured directly or indirectly by
margin stock as of June 30, and the amount of credit extended secured directly or indirectly by
margin stock during the year. Lenders are required to indicate whether the loans involved
constitute purpose or nonpurpose credit and to disclose whether credit is used to fund employee
stock options, purchases, or ownership plans. Those lenders funding stock options, purchases,
and ownership plans must specify whether such credit was extended pursuant to the provisions
set forth in section 221.4 of Regulation U, which authorizes employers to extend credit to
employees and ESOPs without regard to the margin requirements.
The information submitted on the annual report is required pursuant to Regulation U to
enable the Federal Reserve to monitor the amount of credit that is secured by margin stock and
that is extended by nonbank lenders.
Statements of Purpose (FR T-4, FR U-1, and FR G-3)
Lenders that extend credit pursuant to the Federal Reserve’s margin requirements are
sometimes required to obtain purpose statements from their customers. The FR T-4 purpose
statement is used for extensions of credit by brokers and dealers, the FR U-1 is used for
extensions of credit by banks, and the FR G-3 is used for extensions of credit by other lenders.

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Both the borrower and the lender complete portions of the purpose statement. Each
purpose statement consists of three parts. The borrower completes Part I of the reporting form
and is required to do the following: state the amount of the loan and whether the purpose of the
loan is to purchase, carry, or trade in securities (pursuant to Regulation T) or purchase or carry
margin stock (pursuant to Regulation U) and, if not, describe the specific purpose of the loan.
Borrowers must also answer a question as to whether the securities serving as collateral will be
delivered against payment. The borrower must sign and date the reporting form. The lender
completes Part II, which may entail listing and valuing any collateral. The lender then signs and
dates Part III of the reporting form, acknowledging that the customer’s statement is accepted in
good faith. The lender is required to hold the forms for at least three years after the credit is
extinguished. The Board does not collect or process this information, but the information required
on the form may be used by Federal Reserve examiners to assess compliance with the Act and
Regulations T and U.
The FR T-4, FR U-1, and FR G-3 purpose statements serve as a compliance tool for
Regulation T and U lenders, as well as a means by the Justice Department or the Securities and
Exchange Commission to verify compliance with the Act and the Board’s rules, and, as
necessary, an evidentiary or enforcement tool.
Statement of Purpose for an Extension of Credit by a Creditor (FR T-4). This form
must be completed only if the purpose of the credit being extended is not to purchase, carry, or
trade in securities and the credit is in excess of that otherwise permitted under Regulation T
(nonpurpose credit). The information captured on FR T-4 provides a written record of the
amount of nonpurpose credit being extended, the purpose for which the money is to be used, and
a listing and valuation of collateral.
Statement of Purpose for an Extension of Credit Secured by Margin Stock (FR U-1).
To comply with the requirements of Regulation U, a bank must complete the FR U-1 purpose
statement when it extends credit in excess of $100,000 secured directly or indirectly, in whole
or in part, by any margin stock. The information captured on FR U-1 provides a written record
of the amount of credit being extended, the purpose for which the money is to be used, and a
listing and valuation of collateral.
Statement of Purpose for an Extension of Credit Secured by Margin Stock by a
Person Subject to Registration Under Regulation U (FR G-3). Any nonbank lender subject to
the registration requirement of Regulation U must complete an FR G-3 purpose statement for
each extension of credit secured directly or indirectly, in whole or in part, by any margin stock.
The purpose statement is intended to ensure that a lender does not extend credit to purchase or
carry margin stock in excess of the amount permitted by the Federal Reserve pursuant to
Regulation U. The FR G-3 reporting form collects the same information as the FR U-1 reporting
form.
Respondent Panel
The FR G-1, FR G-2, FR G-3, and FR G-4 panels comprise lenders, other than banks,
brokers, or dealers, that extend margin credit, including federal and state credit unions; insurance

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companies; commercial and consumer credit organizations; production credit associations; small
businesses; insurance premium funding plans; plan-lenders (a company or its affiliate that extends
credit to employees to purchase company stock under an eligible employee stock option or stock
purchase plan); and lenders to Employee Stock Ownership Plans (ESOPs), thrift plans, and
broker-dealer affiliates. The FR T-4 panel comprises brokers and dealers and the FR U-1 panel
comprises banks.
Time Schedule for Information Collection
The FR G-1, FR G-2, and FR G-4 are sent directly to the Board as a PDF via a designated
e-mail address. The FR G-l is event-generated and must be filed within 30 calendar days
following the end of the calendar quarter during which the nonbank lender becomes subject to the
registration requirements. All FR G-1 registrants are required to file FR G-4 within 30 calendar
days of the June 30 as of date. The FR G-3, FR T-4, and FR U-1 are event-generated
recordkeeping requirements.
Public Availability of Data
No data collected by this information collection is published.
Legal Status
The FR G-1, FR G-2, FR G-3, FR G-4, FR T-4, and FR U-1 are authorized by sections 7
and 23 of the Securities Exchange Act of 1934 which state, respectively, that the Board shall
“prescribe rules and regulations with respect to the amount of credit that may be initially
extended and subsequently maintained on any security” (15 U.S.C. § 78g) and that “[t]he
Commission, the Board of Governors of the Federal Reserve System, and the other agencies
enumerated in section 78c(a)(34) of this title shall each have power to make such rules and
regulations as may be necessary or appropriate to implement the provisions of this chapter for
which they are responsible or for the execution of the functions vested in them by this chapter,
and may for such purposes classify persons, securities, transactions, statements, applications,
reports, and other matters within their respective jurisdictions, and prescribe greater, lesser, or
different requirements for different classes thereof” (15 U.S.C. § 78w). All six reports are
mandatory.
Individual respondents may request that information submitted to the Board through the
FR G-1 and FR G-4 be kept confidential. If a respondent requests confidential treatment, the
Board will determine whether the information is entitled to confidential treatment on a case -bycase basis. To the extent a respondent submits nonpublic commercial or financial information,
which is both customarily and actually treated as private by the respondent, the respondent may
request confidential treatment pursuant to exemption 4 of the Freedom of Information Act
(FOIA) (5 U.S.C. § 552(b)(4)). To the extent a respondent submits personal, medical, or similar
files, the disclosure of which would constitute an unwarranted invasion of privacy, the
respondent may request confidential treatment pursuant to exemption 6 of the FOIA (5 U.S.C. §
552(b)(6)).

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Because the FR G-3, FR T-4, and FR U-1 are maintained at each banking organization,
FOIA would only be implicated if the Board obtained such records as part of the examination or
supervision of a banking organization. In the event the records are obtained by the Board as part
of an examination or supervision of a financial institution, this information would be considered
confidential pursuant to exemption 8 of the FOIA, which protects information contained in
“examination, operating, or condition reports” obtained in the bank supervisory process.
Information collected through the FR G-2 is not considered to be confidential.
Consultation Outside the Agency
There has been no consultation outside the Federal Reserve System.
Public Comments
On December 23, 2020, the Board published an initial notice in the Federal Register
(85 FR 83950) requesting public comment for 60 days on the extension, without revision, of the
Margin Credit Reports. The comment period for this notice expired on February 22, 2021. The
Board did not receive any comments. The Board adopted the extension, without revision, of the
Margin Credit Reports as originally proposed. On April 16, 2021, the Board published a final
notice in the Federal Register (86 FR 20151).
Estimate of Respondent Burden
As shown in the table below, the estimated total annual burden for the Margin Credit
Reports is 260 hours. The total burden comprises both reporting and recordkeeping burden. The
total annual reporting burden for the FR G-1, FR G-2, and FR G-4 is estimated to be 175 hours.
The total annual recordkeeping burden for the FR G-3, FR T-4, and FR U-1 purpose statements is
estimated to be 85 hours. These reporting and recordkeeping requirements represent less than 1
percent of the Board’s total paperwork burden.
Estimated
Estimated
Estimated
Annual
number of
average hours annual burden
frequency
respondents1
per response
hours
Reporting
FR G-1
FR G-2
FR G-4
Recordkeeping
FR G-3
FR T-4
FR U-1

13
8
70

1
1
1

2.50
0.25
2.00

33
2
140

6
4
4

20
20
75

0.17
0.17
0.17

20
14
51
260

Total

1

Of these respondents, none are considered small entities as defined by the Small Business Administration (i.e .,
entities with less than $600 million in total assets), https://www.sba.gov/document/support--table-size-standards.

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The estimated total annual cost to the public for the Margin Credit Reports is $15,379.2
Sensitive Questions
These collections of information contain no questions of a sensitive nature, as defined by
OMB guidelines.
Estimate of Cost to the Federal Reserve System
The estimated cost to the Federal Reserve System for collecting and processing these
information collections is negligible.

2

Total cost to the public was estimated using the following formula: percent of staff time, multiplied by annual
burden hours, multiplied by hourly rates (30% Office & Administrative Support at $20, 45% Financial Managers at
$73, 15% Lawyers at $72, and 10% Chief Executives at $95). Hourly rates for each occupational group are the
(rounded) mean hourly wages from the Bureau of Labor and Statistics (BLS), Occupational Employment and Wages
May 2020, published March 31, 2021, https://www.bls.gov/news.release/ocwage.t01.htm. Occupations are defined
using the BLS Standard Occupational Classification System, https://www.bls.gov/soc/.

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