12 CFR 220.128 : Banks And Banking (§ 1.1 To Parts 1816-1899) — (§ 220.1 To Appendix F To Part 229) — Federal Reserve System (Continued) (§ 220.1 To Appendix F To Part 229) — Board Of Governors Of The Federal Reserve System (Continued) (§ 220.1 To Appendix F To Part 229) — Credit By Brokers And Dealers (Regulation T) (§ 220.1 To § 220.132) — Interpretations (§ 220.101 To § 220.132) — Treatment of simultaneous long and short positions in the same margin account when put or call options or combinations thereof on such stock are also outstanding in the account.

(a) The Board was recently asked whether under Regulation T, “Credit by Brokers and Dealers” (12 CFR part 220), if there are simultaneous long and short positions in the same security in the same margin account (often referred to as a short sale “against the box”), such positions may be used to supply the place of the deposit of margin ordinarily required in connection with the guarantee by a creditor of a put or call option or combination thereof on such stock.

(b) The applicable provisions of regulation T are § 220.3(d)(3) and (5) and § 220.3(g)(4) and (5) which provide as follows:

(d) * * * the adjusted debit balance of a general account * * * shall be calculated by taking the sum of the following items: