2450. Installment or Partial Sales
This rule is no longer applicable.
(a) Prohibition
No member shall take or carry any account or make a transaction for any customer under any arrangement which contemplates or provides for the purchase of any security for the account of the customer or for the sale of any security to the customer, where payment for the security is to be made to the member by the customer over a period of time in installments or by a series of partial payments, unless:
(1) Member Acts as Agent
In the event such member acts as an agent or broker in such transaction he shall immediately, in the regular course of business, make an actual purchase of the security for the account of the customer, and shall immediately, in the regular course of business, take possession or control of such security and shall maintain possession or control thereof so long as he remains under obligation to deliver the security to the customer;
(2) Member Acts as Principal
In the event such member acts as principal in such transaction, he shall, at the time of such transaction own such security and shall maintain possession or control thereof so long as he remains under obligation to deliver the security to the customer;
(3) Regulation T Satisfied
The provisions of Regulation T of the Federal Reserve Board, if applicable to such member, are satisfied.
(b) Hypothecation
No member, whether acting as principal or agent, shall, in connection with any transaction referred to in this Rule, make any agreement with his customer under which such member shall be allowed to pledge or hypothecate any security involved in such transaction for any amount in excess of the indebtedness of the customer to such member.