[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