[Federal Register Volume 60, Number 104 (Wednesday, May 31, 1995)]
[Notices]
[Pages 28412-28413]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-13212]
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FEDERAL RESERVE SYSTEM
Societe Generale; Notice To Engage in Nonbanking Activities
Societe Generale, Paris, France (Notificant), has provided notice
pursuant to section 4(c)(8) of the Bank Holding Company Act (12 U.S.C.
1843(c)(8)) (BHC Act) and Sec. 225.23(a)(3) of the Board's Regulation
Y (12 CFR 225.23(a)(3)), to acquire through its subsidiary, FIMAT
Futures USA, Inc., Chicago, Illinois (Company), substantially all of
the assets of Brody, White & Company, Inc., New York, New York (Brody
White). Company currently engages in a variety of futures commission
merchant and foreign exchange-related activities. See Societe Generale,
80 Federal Reserve Bulletin 649 (1994) (Societe Generale I) and Societe
Generale, 80 Federal Reserve Bulletin 646 (1994) (Societe Generale II).
Upon acquisition of Brody White, Company would expand its activities to
include becoming a clearing member of the New York Cotton Exchange,
Commodity Exchange, Inc., Financial Exchange, New York Futures Exchange
and the Coffee, Sugar & Cocoa Exchange; purchasing and selling through
omnibus accounts futures and options on futures on the London Commodity
Exchange and Winnipeg Commodity Exchange; and acting as riskless
principal in connection with spot, forward and over-the-counter option
transactions in the foreign exchange market.
Notificant has stated that upon acquisition of Brody White, Company
would continue to provide futures commission merchant execution,
clearance and advisory services subject to the same limitations,
conditions and commitments relied on by the Board in Societe Generale
I, with one exception. In particular, Notificant proposes that Company
provide execution, clearance and advisory services to commercial hedger
customers with net worths of less than $1 million. The Board previously
has relied on commitments that clearing-only services and futures
commission merchant services provided with respect to futures and
options on futures on nonfinancial commodities would be provided solely
to institutional customers, as defined in Sec. 225.2(g) of Regulation
Y. Notificant has represented that these customers would not be
unsophisticated retail investors. Notificant also has stated that in
order to address suitability and credit risk issues, as well as any
other possible adverse effects, noninstitutional customers would have
to represent in writing that they are engaged in bona fide hedging
transactions for purposes of CFTC regulation 1.3(z) (17 CFR 1.3(z)),
and Company would have a system in place to detect any unauthorized
trading by these customers in commodities other than those as to which
hedge margin status has been granted. In addition, there would be an
initial credit review process to determine whether a customer's
proposed hedging activities are appropriate in light of the customer's
net worth and business activities, as well as periodic reviews on
actual trading activities in the account. Based on these facts,
Notificant maintains that providing the proposed futures commission
merchant services to certain noninstitutional customers is so closely
related to banking as to be a proper incident thereto.
Notificant also has stated that upon acquisition of Brody White,
Company would purchase and sell, on the order of investors as riskless
principal, foreign exchange in the spot, forward and over-the-counter
option markets. Notificant maintains that the Board previously has
determined that purchasing and selling foreign exchange as riskless
principal is closely related to banking. See Banca Commerciale
Italiana, 76 Federal Reserve Bulletin 649 (1990) (BCI). Notificant has
stated that Company would provide the proposed riskless principal
services in accordance with the limitations, commitments and conditions
relied on by the Board in BCI. Notificant also has stated that Company
would continue to comply with commitments made to the Board in Societe
Generale II that relate to providing foreign exchange execution and
advisory services on a combined basis.
In order to approve the proposal, the Board must determine that the
proposed activities to be conducted by Company ``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.'' 12 U.S.C. 1843(c)(8). Notificant maintains
that the proposal would not produce any adverse effects. Notificant
also maintains that the proposal would lead to increased competition in
the relevant markets, better customer service, lower costs and greater
efficiency.
Any comments 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 June 30,
1995. Any request for a hearing on this notice must, as required by
Sec. 262.3(e) of the Board's Rules of Procedure (12 CFR 262.3(e)), 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.
This notice may be inspected at the offices of the Board of
Governors or the Federal Reserve Bank of New York.
[[Page 28413]] Board of Governors of the Federal Reserve System,
May 24, 1995.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 95-13212 Filed 5-30-95; 8:45 am]
BILLING CODE 6210-01-F
