A more thorough explanation:

Regulation U is a rule made by the Federal Reserve Board. It sets a limit on how much money a bank can lend to a customer who wants to buy or hold securities on margin.

For example, if a customer wants to buy $10,000 worth of stocks on margin, the bank can only lend them a certain amount of money, based on the value of the securities they already own. This is to prevent customers from borrowing too much money and getting into financial trouble.

Another example is if a customer already has $5,000 worth of securities and wants to buy an additional $5,000 worth of stocks on margin. The bank can only lend them a certain amount of money, based on the value of the securities they already own.

Regulation U helps to protect both the customer and the bank from taking on too much risk. It ensures that customers are not borrowing more money than they can afford to pay back, and it helps to prevent banks from lending too much money and potentially losing money if the customer defaults on the loan.