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Margin Stock
Practical Law Glossary Item 3-382-3611 (Approx. 2 pages)
Glossary
Margin Stock
A term defined under Regulation U to generally include publicly traded securities. Regulation U restricts banks and other lenders in the amount of credit they can extend to finance the purchase or carrying of margin stock where that margin stock also serves as collateral for the loan. Margin stock includes any:
- Equity security listed on a national securities exchange.
- OTC security that has been designated as qualifying for trading in the National Market System under a plan approved by the SEC.
- Debt security convertible into a margin stock or carrying a warrant or right to subscribe to or purchase a margin stock.
- Warrant or right to subscribe to or purchase a margin stock.
- Security issued by an investment company registered under section 8 of the Investment Company Act of 1940 (with certain exceptions).
(12 C.F.R. § 221.2). For more information on margin stock and the margin lending restrictions under Regulation U, see Practice Note, Margin Rules for Banks and Non-Broker-Dealer Lenders (Reg. U).