§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, a company from another country as a primary dealer in government debt if that company’s country does not give U.S. firms the same chances to underwrite and sell that country’s government bonds. That rule does not block a company already designated before July 31, 1987 from staying a dealer in cases where certain ownership changes or notices about ownership happened before that date. It also does not apply to companies from countries that, as of January 1, 1987, were negotiating a bilateral agreement with the United States or that had a bilateral free trade agreement in force before January 1, 1987. A "person of a foreign country" means a person (or someone who owns or controls them) who lives in, is organized under the laws of, or has their main business place in that country. Congress found that U.S. firms can compete if given fair access, that a services trade surplus could help the overall trade gap, that Japanese firms had fair access to U.S. markets, and that U.S. firms faced seven types of barriers in Japan (for example, limits on exchange membership, high fixed commissions, unequal underwriting roles, ATM and branch limits, slow approvals, and limits on advisory councils). This rule becomes effective 12 months after August 23, 1988.