12 CFR § 221.109 - Loan to open-end investment company.

---
identifier: "/us/cfr/t12/s221.109"
source: "ecfr"
legal_status: "authoritative_unofficial"
title: "12 CFR § 221.109 - Loan to open-end investment company."
title_number: 12
title_name: "Banks and Banking"
section_number: "221.109"
section_name: "Loan to open-end investment company."
chapter_name: "FEDERAL RESERVE SYSTEM"
subchapter_number: "A"
subchapter_name: "BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM"
part_number: "221"
part_name: "CREDIT BY BANKS AND PERSONS OTHER THAN BROKERS OR DEALERS FOR THE PURPOSE OF PURCHASING OR CARRYING MARGIN STOCK (REGULATION U)"
positive_law: false
currency: "2026-04-05"
last_updated: "2026-04-05"
format_version: "1.1.0"
generator: "[email protected]"
authority: "15 U.S.C. 78c, 78g, 78q, and 78w."
regulatory_source: "Reg. U, 63 FR 2827, Jan. 16, 1998, unless otherwise noted."
cfr_part: "221"
---


# 221.109 Loan to open-end investment company.

In response to a question regarding a possible loan by a bank to an open-end investment company that customarily purchases stocks registered on a national securities exchange, the Board stated that in view of the general nature and operations of such a company, any loan by a bank to such a company should be presumed to be subject to this part as a loan for the purpose of purchasing or carrying margin stock. This would not be altered by the fact that the open-end company had used, or proposed to use, its own funds or proceeds of the loan to redeem some of its own shares, since mere application of the proceeds of a loan to some other use cannot prevent the ultimate purpose of a loan from being to purchase or carry registered stocks.