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FEDERAL RESERVE iA M K OF MEW YORK [ Circular No. 98S1 May 3, 1985 ] BANK H O LD IN G COM PANIES C om m ent Invited on Application to Deal In Foreign C urrency O ptions T rad ed on a Stock Exchange To A ll Bank Holding Companies, and Others Concerned, in the Second Federal Reserve District: Following is the text of a statement issued by the Board of Governors of the Federal Reserve System: The Federal Reserve Board has requested comment on an application by Compagnie Financiere de Suez and its subsidiary, Banque Indosuez, both of Paris, France, to deal in foreign currency options traded on a stock exchange through a joint venture. The Board requested comment by May 28, 1985. This is an activity the Board has not previously found to be permissible for bank holding companies. It would be performed under a joint venture with Drexel Burnham Lambert Group Inc., New York, through the company’s offices in Philadelphia as well as on the Philadelphia Stock Exchange. Printed on the reverse side is the text of the Board’s notice, which has been reprinted from the F e d e r a l R e g i s t e r of April 29. Comments thereon should be submitted by May 28, 1985, and may be sent to our Domestic Banking Applica tions Department. E. G e r a l d C o r r ig a n , P r e s id e n t. (OVER) BOARD OF GOVERNORS OF THE FEDERAL RESERVE STYSTEM Comp^gnite Financier© dte S m©i and Banqu© Irsdosuei; Proposal to 0©@S in Foreign Currency Options Traded ©n © Stosh inching© Through a Joint V©ntur© Compagnie Financiere de Suez and its subsidiary, Banque Indosuez, both of Paris, France, have applied, pursuant to section ^c)(8) of the Bank Holding Company Act (12 U.S.C. 1843(c)(8)) and § 225.23(a)(3) of the Board’s Regulation Y (12 CFR 225.23(a)(3)), for permission to engage in the activity of dealing in French franc options in the role of specialist in such foreign currency options traded on the Philadelphia Stock Exchange. Applicants would engage in the activity through a joint venture with Drexel Burnham Lambert Group IncNew York, New York (“DBL”), an investment banking firm. Banque Indosuez and DBL would each own 50 percent of the shares of Indosuez-Drexel Burnham Lambert, Inc. (“Company”), the successor to Drexel Burnham . Lambert (French) Options Inc., a company previously formed to serve as the vehicle for conducting the proposed activity through the proposed joint venture. The activity would be performed through Company’s offices in Philadelphia and on the Philadelphia Stock Exchange, serving customers in the United States and abroad. Section 4(c)(8) of the Bank Holding Company Act provides that a bank holding company may, with Board approval, engage in any activity “which the Board after due notice and opportunity for hearing has determined (by order or regulation) to be so closely related to banking or managing or controlling banks as to be a proper incident thereto.” The Board has not previously approved the proposed activity. Applicants believe that the activity is so closely related to banking or managing or controlling banks as to be a proper incident thereto. In the Applicants’ opinion, currency options are functionally equivalent to other aspects of foreign exchange traditionally and historically dealt in by commercial banks. In addition, Applicants state that at least one bank has been permitted to engage in the proposed activity of acting as a specialist in foreign currency options on a stock exchange. Interested persons may express their views on whether the proposed activity, conducted through a joint venture on the basis proposed, is “so closely related to banking or managing or controlling banks as to be a proper incident thereto,” and whether the proposal as a whole can “reasonably be expected to produce benefits to the public, such as greater convenience, increased competition or gains in efficiency, that outweigh possible adverse effects, such* as undue concentration of resources, decreased or unfair competition, conflicts of interests, or unsound banking practices.” Any request for a hearing on these questions must be accompanied by a statement of the reasons why a written presentation would not suffice in lieu of a hearing, identifying specifically any questions of fact that are in dispute, summarizing the evidence that would be presented at a hearing, and indicating how the party commenting would be aggrieved by approval of the proposal. The application may be inspected at the offices of the Board of Governors or the Federal Reserve Bank of New York. Any views or requests for hearing should be submitted in writing and received by William W. Wiles. Secretary, Board of Governors of the Federal Reserve System, Washington, D.C. 20551, not later than May 28,1985. Board of Governors of the Federal Reserve System, April 23,1984. W illia m W . W i l e s , Secretary o f the Board. [FR Doc. 85-10209 Filed 4-26-85: 8:45 am)
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