[Federal Register Volume 59, Number 207 (Thursday, October 27, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-26605]


[[Page Unknown]]

[Federal Register: October 27, 1994]


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FEDERAL RESERVE SYSTEM

 

Commerzbank Aktiengesellschaft, Frankfurt am Main, Federal 
Republic of Germany; Application to Engage in Nonbanking Activities

    Commerzbank Aktiengesellschaft, Frankfurt am Main, Federal Republic 
of Germany (Applicant), has applied 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 
engage de novo through CB Clearing, Inc., Chicago, Illinois (Company), 
a futures commission merchant (FCM) registered under the Commodity 
Exchange Act (7 U.S.C. Sec.  1 et seq.), in executing and clearing, 
clearing without executing, and purchasing and selling through the use 
of omnibus trading accounts futures and options on futures on 
nonfinancial commodities that previously have been approved by the 
Board. Applicant also has applied to engage through Company in 
executing transactions with respect to the following contracts: Major 
Market Index options traded on the American Stock Exchange; Standard & 
Poor's 100 Stock Index options, Standard & Poor's 500 Stock Index 
options, Long-Term Interest Rate options, Short-Term Interest Rate 
options, Long-Term U.S. Treasury Index options, and Short-Term U.S. 
Treasury Index options traded on the Chicago Board Options Exchange; 
and Deutsche Mark options, Swiss Franc options, Australian Dollar 
options, British Pound options, Canadian Dollar options, European 
Currency Unit (ECU) options, French Franc options and Japanese Yen 
options traded on the Philadelphia Stock Exchange. Applicant proposes 
to conduct these activities throughout the world.
    Section 4(c)(8) of the BHC Act provides that a bank holding company 
may, with Board approval, engage in any activity which the Board, after 
due notice and opportunity for hearing, has determined (by order or 
regulation) to be so closely related to banking or managing or 
controlling banks as to be a proper incident thereto. This statutory 
test requires that two separate tests be met for an activity to be 
permissible for a bank holding company. First, the Board must determine 
that the activity is, as a general matter, closely related to banking. 
Second, the Board must find in a particular case that the performance 
of the activity by the applicant bank holding company may reasonably be 
expected to produce public benefits that outweigh possible adverse 
effects.
    A particular activity may be found to meet the ``closely related to 
banking'' test if it is demonstrated that banks generally have provided 
the proposed activity, that banks generally provide services that are 
operationally or functionally similar to the proposed activity so as to 
equip them particularly well to provide the proposed activity, or that 
banks generally provide services that are so integrally related to the 
proposed activity as to require their provision in a specialized form. 
National Courier Ass'n v. Board of Governors, 516 F.2d 1229, 1237 (D.C. 
Cir. 1975). In addition, the Board may consider any other basis that 
may demonstrate that the activity has a reasonable or close 
relationship to banking or managing or controlling banks. Board 
Statement Regarding Regulation Y, 49 FR 806 (1984).
    Applicant maintains that the Board previously has determined that 
the proposed FCM activities are closely related to banking. See Bank of 
Montreal, 79 Federal Reserve Bulletin 1049 (1993); J.P. Morgan & Co. 
Incorporated, 80 Federal Reserve Bulletin 151 (1994)(J.P. Morgan). 
Applicant states that it would perform the proposed FCM activities in a 
manner consistent with these previous orders. Applicant also maintains 
that the Board previously has determined by regulation and order that 
the proposed options execution activities are closely related to 
banking. See Manufacturers Hanover Corporation, 76 Federal Reserve 
Bulletin 774 (1990); 12 C.F.R. Sec.  225.25 (b)(15). Applicant states 
that it would perform the proposed options execution activities in 
accordance with this order and regulation.
    In order to approve this proposal, the Board must determine that 
the proposed activities ``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. Sec.  1843(c)(8). Applicant believes that the proposal would 
produce public benefits that outweigh any potential adverse effects. In 
particular, Applicant maintains that the proposal will enhance 
competition and enable Applicant to offer its customers a broader range 
of services. In addition, Applicant states that the proposed activities 
will not result in adverse effects such as an undue concentration of 
resources, decreased or unfair competition, conflicts of interest, or 
unsound banking practices.
    In publishing the proposal for comment, the Board does not take a 
position on issues raised by the proposal. Notice of the proposal is 
published solely to seek the views of interested persons on the issues 
presented by the application and does not represent a determination by 
the Board that the proposal meets, or is likely to meet, the standards 
of the BHC Act.
    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 November 
21, 1994. Any request for a hearing on this application 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 application may be inspected at the offices of the Board of 
Governors or the Federal Reserve Bank of New York.
    Board of Governors of the Federal Reserve System, October 21, 
1994.
Jennifer J. Johnson,
Deputy Secretary of the Board.
[FR Doc. 94-26605 Filed 10-26-94; 8:45 am]
BILLING CODE 6210-01-F