§5342 Requirement of national treatment in underwriting government debt instruments

Summary

The Federal Reserve Board and the Federal Reserve Bank of New York must not name, or keep named, any foreign firm as a primary dealer for a country’s government bonds if that country does not give U.S. companies the same chances to underwrite and sell those bonds that it gives to its own firms. Congress found that U.S. companies need fair access to compete abroad, that a services trade surplus could help reduce the trade deficit, and that U.S. firms faced many barriers in Japan while Japanese firms generally had equal access to U.S. financial markets. There are a few exceptions. A prior designation can continue if it happened before July 31, 1987 and, before that date, control of the company was taken by a foreign person from a non-foreign person or the company told the New York Fed that a foreign person planned to take control. The rule also does not apply to a foreign person if that person’s country was, as of January 1, 1987, negotiating a bilateral agreement with the United States under the authority of section 2112(b)(4)(A) of title 19, or had a bilateral free trade area agreement in force before January 1, 1987. A “person of a foreign country” means a person (or an owner of that person) who lives in, is organized under the laws of, or has its main place of business in that country. The rule takes effect 12 months after August 23, 1988.