New T-Bill Dealer: Dai-Ichi Kangyo Bank, Japan’s largest commercial bank, has set up a brokerage subsidiary in New York to deal in and underwrite U.S. Treasury bonds.
The subsidiary, DKB Securities, is expected to start trading this summer and employ 15 to 20 people by year-end, according to Masahiro Yagi, its president. It is capitalized at $30 million.
Commercial banks, both U.S. and foreign, are allowed to trade in and underwrite government bonds and other eligible securities such as general obligation bonds.
Yagi said the bank had no plans to apply to the U.S. Federal Reserve for powers to underwrite corporate debt under Section 20 of the 1933 Glass-Steagall Act, although he said this might be a possibility as those powers become more widely available.
The Fed recently authorized five leading U.S. commercial banks to underwrite all forms of debt subject to their compliance with various regulatory and capital adequacy rules, a decision being challenged in the courts by the Securities Industry Assn.