§5342 Requirement of National Treatment in Underwriting Government Debt Instruments

Summary

The Federal Reserve and the New York Federal Reserve must not name or keep a foreign firm as a primary dealer in a foreign country’s government debt unless that firm’s country gives U.S. companies the same chances to underwrite and sell that country’s government debt as it gives its own firms. Congress said U.S. firms face unfair barriers in places like Japan, including limits on stock exchange membership, very high fixed commissions, unequal chances to lead bond or stock sales, restricted ATM and branch access, slow licensing, and exclusion from policy councils. A few exceptions apply. Firms already designated before July 31, 1987 may continue if control passed to a foreign owner before that date or the firm told the New York Fed about a planned foreign takeover before that date. The rule also does not apply to firms from countries that were negotiating a bilateral agreement with the U.S. as of January 1, 1987 or had a bilateral free trade area with the U.S. in force before that date. A “person of a foreign country” means someone tied to that country by residence, organization, main place of business, or ownership. The rule takes effect 12 months after August 23, 1988.