Current through Register Vol. 54, No. 45, November 9, 2024
Section 21.31 - Commodity futures and gold and silver transactions(a) An institution may enter into transactions involving commodity futures or gold or silver coin or bullion solely on behalf of customers, upon formal written agreements with customers to purchase or sell for their accounts these items. In no event may an institution engage in these transactions for its own account, except in extensions of credit in the form of repurchase agreements covering silver coin or bullion in the ordinary course of business.(b) An institution may enter into an agreement with a supplier of gold or silver coin or bullion whereby the institution acts as agent for the supplier and accepts such metals, in whatever form, upon either a consignment basis or for delivery within a few days after a specific order is received, with no right or title to the metals or proceeds from sale thereof, except agent's commission. An institution may not purchase gold or silver from a customer except as the agent of such a supplier. An institution shall determine whether its blanket bond covers gold or silver in its possession or whether separate insurance is necessary.(c) An institution may not take pledges of commodity futures or gold or silver coin or bullion as collateral security for a loan unless the market value of such pledged asset at all times is not less than 120% of the value of the loan.(d) An institution shall disclose to customers proposing to enter into the aforementioned transactions the general risks that are inherent therein, as well as the expenses customarily charged in connection with the transactions. An institution shall disclose that these markets are volatile, that there is a possibility that a loss will be incurred, that such investments provide no yield or interest, and that if bullion is not left for safekeeping with the institution, the customer may incur a substantial charge for authentication of the bullion at the time of sale. In all sales or purchases of gold or silver made by an institution under this section, the institution shall disclose that it is acting as agent of a supplier and the identity of the supplier.The provisions of this §21.31 adopted July 18, 1975, 5 Pa.B. 1840, amended April 28, 1978 8 Pa.B. 1190.