DEFINITION of 'Regulation F'

A regulation set forth by the Federal Reserve. Regulation F specifies that banks must institute internal rules that regulate the amount of risk that they can take in their business proceedings with other institutions. It also limits the amount of credit exposure between banks to 25% of capital, in most cases.

BREAKING DOWN 'Regulation F'

Regulation F covers the collection of checks as well as various other services that larger banks offer to smaller ones. It also covers certain types of transactions in the financial markets – interest rate swaps and repurchase agreements fall under this regulation. Regulation F may also allow banks that are highly capitalized to have higher levels of credit exposure.

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