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February 9, 1996

Michael Evan Avidon, Esq.
Moses & Singer LLP
1301 Avenue of the Americas
New York, New York 10019-6076

Dear Mr. Avidon:

This responds to your letter of February 8, 1996, concerning a proposed revolving credit facility for National Securities Clearing Corporation (NSCC). Your client is [Word(s) deleted] (the bank), acting as agent for itself and other banks.

Your letter indicates that the proposed credit facility is similar to an earlier facility NSCC had with the bank. This earlier facility is the subject of a staff opinion of March 25, 1993, digested in the Federal Reserve Regulatory Service at 5-884.68. Our 1993 letter indicates that the facility described therein is exempt from Regulation U pursuant to section 221.6(f) of the regulation.

Board staff believes the exemption in section 221.6(f) is equally applicable to the proposed credit facility. Your letter notes that the rules of NSCC require it to liquidate the stock collateral promptly, unless in its opinion to do so would create a disorderly market. In order to allow for this possibility, loans to NSCC under the facility in some cases may have a term of up to sixty days. One of the conditions of section 221.6(f) of Regulation U is that the loan be "repaid in the ordinary course of business upon completion of the transaction." Board staff believes this phrase encompasses NSCC's obligation to avoid creating a disorderly market and therefore the sixty day term is not inconsistent with section 221.6(f) of Regulation U.

This is a staff opinion only, as the matter has not been presented to the Board for its consideration. Please do not hesitate to contact us if you have any further questions.

Yours truly,

(signed) Scott Holz

Scott Holz

Senior Attorney

cc: Peter J. Axilrod, Esq. - NSCC

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