---
kind: "section"
citation: "12 C.F.R. § 220.6"
title: "12"
number: "220.6"
heading: "Good faith account."
url: "https://uscodex.org/cfr/12/220.6"
---

# §220.6. Good faith account.


In a good faith account, a creditor may effect or finance customer transactions in accordance with the following provisions:

- (a) **Securities entitled to good faith margin—**
  - (1) **Permissible transactions.** A creditor may effect and finance transactions involving the buying, carrying, or trading of any security entitled to “good faith” margin as set forth in [§ 220.12](/cfr/12/220.12.md) (the Supplement).
  - (2) **Required margin.** The required margin is set forth in [§ 220.12](/cfr/12/220.12.md) (the Supplement).
  - (3) **Satisfaction of margin.** Required margin may be satisfied by a transfer from the special memorandum account or by a deposit of cash, securities entitled to “good faith” margin as set forth in [§ 220.12](/cfr/12/220.12.md) (the Supplement), any other asset that is not a security, or any combination thereof. An asset that is not a security shall have a margin value determined by the creditor in good faith.
- (b) **Arbitrage.** A creditor may effect and finance for any customer bona fide arbitrage transactions. For the purpose of this section, the term “bona fide arbitrage” means:
  - (1) A purchase or sale of a security in one market together with an offsetting sale or purchase of the same security in a different market at as nearly the same time as practicable for the purpose of taking advantage of a difference in prices in the two markets; or
  - (2) A purchase of a security which is, without restriction other than the payment of money, exchangeable or convertible within 90 calendar days of the purchase into a second security together with an offsetting sale of the second security at or about the same time, for the purpose of taking advantage of a concurrent disparity in the prices of the two securities.
- (c) **“Prime broker” transactions.** A creditor may effect transactions for a customer as part of a “prime broker” arrangement in conformity with SEC guidelines.
- (d) **Credit to ESOPs.** A creditor may extend and maintain credit to employee stock ownership plans without regard to the other provisions of this part.
- (e) **Nonpurpose credit.**
  - (1) **A creditor may—**
    - (i) Effect and carry transactions in commodities;
    - (ii) Effect and carry transactions in foreign exchange;
    - (iii) Extend and maintain secured or unsecured nonpurpose credit, subject to the requirements of [paragraph (e)(2)](#e-2) of this section.
  - (2) Every extension of credit, except as provided in paragraphs [(e)(1)(i)](#e-1-i) and [(e)(1)(ii)](#e-1-ii) of this section, shall be 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. The statement shall conform to the requirements established by the Board.

## Notes

### Amendments

[Reg. T, 63 FR 2824, Jan. 16, 1998]

### Authority

Authority: 15 U.S.C. 78c, 78g, 78q, and 78w.

### Amendments

[Reg. T, 63 FR 2824, Jan. 16, 1998]