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Federal R eserve Bank
OF DALLAS
w il l ia m
h
. Wa
l l a c e
March 24, 1989
DALLAS, T EXA S 7 5 2 2 2
FIRST V IC E PR E S ID E N T
AND C H IE F O PER ATING O FFIC ER
Circular 89-18
TO:
The Chief Executive Officer of all
member banks and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Foreign Government Treatment of U.S. Companies Operating in
Government Debt Markets Abroad (Docket Number R-0658)
DETAILS
The Federal Reserve Board has requested comment on whether U.S.
companies operating in the government debt markets of certain foreign
countries have the same competitive opportunities as domestic companies in
those markets.
The Primary Dealers Act of 1988 provides that the Federal Reserve
System may not permit a person of a foreign country to act as a primary dealer
in U.S. government securities if that person's home country does not grant to
U.S. companies the same competitive opportunities as the country accords to
domestic companies in underwriting and distributing government debt
obligations. The Act takes effect on August 23, 1989. The Federal Reserve
System is undertaking a study of the government debt markets of four countries
and would welcome comment on the specific respects in which U.S. companies are
accorded, or not accorded, the same competitive opportunities in the
underwriting and distribution of government debt instruments issued by the
four countries as those countries accord to domestic companies.
Those who wish to comment on the Board's proposal should do so by
addressing comments to Mr. William W. Wiles, Secretary, Board of Governors of
the Federal Reserve System, Washington, D.C. 20551. Comments should be
received by May 1, 1989.
ATTACHMENTS
The Board's request is attached.
MORE INFORMATION
For further information regarding this circular, please contact Dean
A. Pankonien at (214) 651-6228.
Sincerely yours,
For additional copies of any circular please contact the Public A ffairs D ep artm en t a t (214) 6 51 -6 2 8 9 . Banks and others are
encouraged to use the follow ing in coming W A TS numbers in contacting this Bank (800) 4 4 2 -7 1 4 0 (in trastate) and (800)
5 2 7 -9 2 0 0 (interstate).
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
FEDERAL
RESERVE
Docket
No.
SYSTEM
R-0658
F O R E I G N G O V E R N M E N T T R E A T M E N T O F U . S.
C O M P A N I E S O P E R A T I N G IN G O V E R N M E N T D E B T M A R K E T S A B R O A D
AGENCY:
Board
of Governors
ACTION:
Notice
of
SUMMARY:
Under
effective
on
not
a
person's
same
or
dealer
home
^c o u n t r y
as
country.
In
requests
with
tr e a t m e n t of
D A T E:
R-0658,
All
should
Governors
20551,
N.
W.,
or
a.m.
does
to
S.
debt
be
comments,
which
be m a i l e d
to
of
the
Comments
5:15
Federal
to
Room
D.
C.,
may
p.m.
be
S.
Act,
issued
t r e a t m e n t of
should
William
the
such
of
such
Reserve
countries
S. c o m p a n i e s
particular
on
the
firms.
1989.
refer
W.
Reserve
U.
to d o m e s t i c
1,
by
Federal
certain
as
and
companies
of
in
may
that
companies
the
markets
by M a y
if
underwriting
focusing
received
becomes
System
country
U.
domestic
relative
which
the d e s i g n a t i o n
instruments
the
markets,
of
to
this
S y st e m.
Reserve
the
to
implement
1988,
foreign
in
accords
on
a
grant
debt
companies
must
Federal
of
not
comment
these
delivered
and
the
continuation
government
Washington,
weekdays.
8:45
U.
Comments
ADDRESS:
of
to
of
opportunities
public
respect
Act
person
order
the
Dealers
of
country
Reserve
comment.
the
any
Federal
for
1989,
government
such
reviewing
and
23,
the
request
permit
competitive
of
and
Primary
country
distribution
is
the
August
designate
primary
study
of
to
Wiles,
System,
Docket
Secretary,
Washington,
No.
B o a rd
D.
C.
B-2222,
20th
& Constitution
Avenue,
between
8:45
a.m.
p.m.
inspected
weekdays.
in
Room
an d
5:15
B-1122
between
2-
-
FOR
FURTHER
Associate
Senior
General
Counsel
Economist,
the
INFORMATION
Counsel
of
Reserve
System,
impaired
only,
(TDD),
Earnestine
Hill
SUPPLEMENTARY
Dealers
a
Act
person
U.
S.
of
a
not
accord
as
the
U.
and
dealer
a
the
foreign
New
York
of
the
primary
dealers
entered
into
States
the
or
Trade
was
a
or
if
act
the
the
of
dealer.
as
a foreign
designated
a
or
had
Th e
informed
of
Act
controlled
bilateral
negotiating
1974,
foreign
also
excludes
by
free
persons
trade
to e n t e r
as of
by
July
agreement
January
1,
of
any
a primary
31,
to
its
1987,
with
the
acquired
B an k
acquire
by
of
the
coverage
country
a trade
1987.
in
Reserve
from
a
does
indirectly
had bee n
from
in
includes
affect
person
into
dealer
obligations
Federal
such
Deaf
opportunities
or
not
and
the
the
country
country"
if,
such
of
Primary
companies
debt
does
person
the
the
home
directly
Act
For
for
primary
domestic
as
Governors
competitive
that
Rea,
System may not permit
foreign
The
of
u n d er
person's
same
company
intent
A c t of
to
accords
"person
by
person
dealer.
country
Reserve
D.
(202/452-3544).
above,
a
was
primary
Federal
O'Day,
John
20551.
Thompson,
noted
M.
or
Device
A
primary
dealer
D.C.
government
controlled
primary
Board
distributing
individual
controls
the
As
country
countries.
foreign
Dorothea
companies
foreign
underwriting
such
or
securities
S.
Affairs,
Tigert,
Kathleen
Telecommunication
foreign
government
Rhodarmer
Division;
Washington,
INFORMATION:
("Act"),
Legal
Monetary
hearing
Ricki
(202/452-3428);
(202/452-3786),
Division
Federal
CONTACT:
that
the
had
United
agreement
und er
3-
-
Th e
Federal
the g o v e r n m e n t
Kingdom,
national
to
debt
Japan,
Switzerland,
primary
determine
the
Germany
of
becoming
ar e
other
two
U.
of
S.
those
an d
not
have
of
Japan,
expressed
accorded
th eir
two
of
currently
grandfathered
the
and
are
in
active
access
these
control
under
Federal
of
United
Germany,
countries
countries,
a study
the
companies
Nationals
Kingdom
Switzerland,
the Act;
Republic
interest
of
in
primary dealers.
The
Federal
U.
S.
f i r m s or
U.
S.
companies
competitive
other
which
considered
would
p e r s o n s on
specific
are a c c o r d e d ,
debt
countries
comments,
Reserve System
opportunities
government
those
of
undertaking
countries,
Republic
markets.
that
is
four
whether
each
United
the
a nd
in
debt
dealers
nationals
of
the F e d e r a l
to
government
System
m a r k e t s of
treatment
countries,
Reserve
in
or
the
instruments
accord
should
to
be
the c o n t e x t
By o r d e r
in
the
of
tne
not
issued
submitted
the
Board
of
accorded,
by
the
an d
four
companies.
by
study
May
of
1,
these
Governors,
the v i e w s
respects
underwriting
domestic
of
welcome
in
the
of
which
same
distribution
countries
All
1989,
as
such
would
be
markets.
January
31,
1989.
(Signed William W. Wiles)
W i l l i a m W. W i l e s
S e c r e t a r y of the B o a r d
@FedFRASER