Orders Issued Under Bank Holding Company Act

Federal Reserve Bulletin, Feb, 2000

Paribas Corporation currently engages in bank-ineligible securities activities in the United States. BNP also engages in bank-ineligible securities activities in the United States through its section 20 subsidiary, BNP Capital Markets, LLC, New York, New York ("BNP Capital"). BNP has stated that it currently intends to operate BNP Capital and Paribas Corporation as separate corporate entities, although it may decide to merge the two entities at some point in the future. Accordingly, Notificants have applied to hold Paribas Corporation pursuant to section 4(c)(8) of the BHC Act. BNP Capital and Paribas Corporation are, and would continue to be, registered as broker-dealers with the Securities and Exchange Commission ("SEC") under the Securities Exchange Act of 1934 (15 U.S.C. [sections] 78a et seq.). Accordingly, both are, and would continue to be, subject to the recordkeeping and reporting obligations, fiduciary standards, and other requirements of the Securities Exchange Act of 1934 and the SEC.

Underwriting and Dealing in Bank-Ineligible Securities

The Board has determined that, subject to the prudential framework of limitations established in previous decisions to address the potential for conflicts of interests, unsound banking practices, or other adverse effects, underwriting and dealing in bank-ineligible securities are so closely related to banking as to be a proper incident thereto within the meaning of section 4(c)(8) of the BHC Act.(5) The Board also has determined that underwriting and dealing in bank-ineligible securities is consistent with section 20 of the Glass-Steagall Act (12 U.S.C. [sections] 377), provided that the company engaged in the activities derives no more than 25 percent of its gross revenues from underwriting and dealing in bank-ineligible securities over a two-year period.(6) Notificants have committed that they will conduct their bank-ineligible securities underwriting and dealing activities subject to the 25-percent revenue limitation and the prudential limitations previously established by the Board. As long as BNP Capital and Paribas Corporation remain separate corporate entities, each will be independently subject to the 25-percent revenue limit on underwriting and dealing in bank-ineligible securities. As a condition of this order, BNP, Paribas, and Paribas Corporation are required to conduct their bank-ineligible securities activities subject to the Operating Standards for section 20 subsidiaries.(7)

Other Activities Approved by Regulation or Order

The Board previously has determined by regulation or order that engaging in credit and credit-related activities; financial and investment advisory activities; securities brokerage, riskless principal, private placement, futures commission merchant, and other agency transactional services; and bank-eligible securities underwriting and dealing, are closely related to banking for purposes of section 4(c)(8) of the BHC Act.(8) In addition, the Board previously has determined by order that private investment fund activities are permissible for bank holding companies when conducted within certain limits(9) Notificants have committed that these activities will be conducted in accordance with the Board's regulations and prior Board decisions relating to these activities.