Text: H.R.3503 — 102nd Congress (1991-1992)All Information (Except Text)

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HR 3503 IH
102d CONGRESS
1st Session
 H. R. 3503
To encourage the establishment and implementation of the principle of fair
trade in financial services in the delivery of financial services, and for
other purposes.
IN THE HOUSE OF REPRESENTATIVES
October 3, 1991
Mr. SCHUMER (for himself, Mr. LEACH, and Mr. STARK) introduced the following
bill; which was referred jointly to the Committees on Banking, Finance and
Urban Affairs, Energy and Commerce, and Ways and Means
A BILL
To encourage the establishment and implementation of the principle of fair
trade in financial services in the delivery of financial services, and for
other purposes.
  Be it enacted by the Senate and House of Representatives of the United
  States of America in Congress assembled,
SECTION 1. SHORT TITLE.
  This Act may be cited as the `Fair Trade in Financial Services Act of 1991'.
SEC. 2. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR BANKS AND BANK
HOLDING COMPANIES.
  The International Banking Act of 1978 (12 U.S.C. 3101 et seq.) is amended
  by adding at the end the following:
`SEC. 18. NATIONAL TREATMENT.
  `(a) PURPOSE- This section is intended to encourage foreign countries
  to accord national treatment to United States banks and bank holding
  companies that operate or seek to operate in those countries, and thereby
  end discrimination against United States banks and bank holding companies.
  `(b) REPORTS REQUIRED-
  `(1) CONTENTS OF REPORT- The Secretary of the Treasury shall, not later
  than December 1, 1992, and biennially thereafter, submit to the Congress
  a report--
  `(A) identifying any foreign country--
  `(i) that does not accord national treatment to United States banks and
  bank holding companies--
  `(I) according to the most recent report under section 3602 of the Omnibus
  Trade and Competitiveness Act of 1988; or
  `(II) on the basis of more recent information that the Secretary deems
  appropriate indicating a failure to accord national treatment;
  `(ii) whose failure to accord national treatment has a significant impact
  on United States banks and holding companies; and
  `(iii) with respect to which no determination under subsection (d)(1)
  is in effect;
  `(B) explaining why the Secretary has not made, or has rescinded, such a
  determination with respect to that country; and
  `(C) describing the results of any negotiations conducted pursuant to
  subsection (c)(1) with respect to that country.
  `(2) SUBMISSION OF REPORT-
  `(A) IN GENERAL- The report required by paragraph (1) may be submitted
  as part of a report submitted under section 3602 of the Omnibus Trade and
  Competitiveness Act of 1988.
  `(B) MOST RECENT REPORT DEFINED- If the report required by paragraph (1)
  is submitted as part of a report under such section 3602, that report under
  section 3602 shall be the `most recent report' for purposes of paragraph
  (1)(A)(i)(I).
  `(c) NEGOTIATIONS REQUIRED-
  `(1) IN GENERAL- The Secretary of the Treasury shall initiate negotiations
  with any foreign country--
  `(A) in which, according to the most recent report under section 3602 of
  the Omnibus Trade and Competitiveness Act of 1988, there is a significant
  failure to accord national treatment to United States banks and bank
  holding companies; and
  `(B) with respect to which no determination under subsection (d)(1) is
  in effect,
to ensure that such country accords national treatment to United States
banks and holding companies.
  `(2) NEGOTIATIONS NOT REQUIRED- Paragraph (1) does not require the Secretary
  of the Treasury to initiate negotiations with a foreign country if the
  Secretary--
  `(A) determines that such negotiations would be fruitless or would impair
  national economic interests; and
  `(B) gives written notice of that determination to the chairman and ranking
  minority member of the Committee on Banking, Housing, and Urban Affairs
  of the Senate and of the Committee on Banking, Finance and Urban Affairs
  of the House of Representatives.
  `(d) SANCTIONS-
  `(1) SECRETARY'S DETERMINATION- The Secretary of the Treasury shall publish
  in the Federal Register any determination that a foreign country does not
  accord national treatment to United States banks or bank holding companies.
  `(2) ACTION BY AGENCY- If the Secretary of the Treasury has published in
  the Federal Register (and has not rescinded) a determination under paragraph
  (1) with respect to a foreign country, any Federal banking agency--
  `(A) may include that determination and the conclusions of the reports
  under section 3602 of the Omnibus Trade and Competitiveness Act of 1988
  and other reports under subsection (b)(1) among the factors the agency
  considers in evaluating any application or notice filed by a person of
  that foreign country; and
  `(B) may, only in consultation with the Secretary of the Treasury, deny
  the application or disapprove the notice.
  `(3) REVIEW- The Secretary of the Treasury may, at any time, and shall,
  annually, review any determination under paragraph (1) and decide whether
  that determination should be rescinded.
  `(e) PREVENTING EXISTING ENTITIES FROM BEING USED TO EVADE THIS SECTION-
  `(1) IN GENERAL- If a determination under subsection (d)(1) is in effect
  with respect to a foreign country, no bank, foreign bank described in section
  8(a), branch, agency, commercial lending company, or other affiliated entity
  that is a person of that country shall, without prior approval pursuant
  to paragraph (3) or (4), directly or indirectly, in the United States--
  `(A) commence any line of business in which it was not engaged as of the
  date on which that determination was published in the Federal Register; or
  `(B) conduct business from any location at which it did not conduct business
  as of that date.
  `(2) EXCEPTION- Paragraph (1) shall not apply with respect to transactions
  under section 2(h)(2) of the Bank Holding Company Act of 1956.
  `(3) STATE-SUPERVISED ENTITIES-
  `(A) This paragraph shall apply if--
  `(i) the entity in question is an uninsured State bank or branch, a State
  agency, or a commercial lending company;
  `(ii) the State requires the entity to obtain the prior approval of the State
  bank supervisor before engaging in the activity described in subparagraph
  (A) or (B) of paragraph (1); and
  `(iii) no other provision of Federal law requires the entity to obtain the
  prior approval of a Federal banking agency before engaging in that activity.
  `(B) The State bank supervisor shall consult about the application with
  the appropriate Federal banking agency (as defined in section 3 of the
  Federal Deposit Insurance Act). If the State bank supervisor approves
  the application, the supervisor shall notify the appropriate Federal
  banking agency and provide the agency with a copy of the record of the
  application. During the 45-day period beginning on the date on which the
  appropriate Federal banking agency receives the record, the agency, after
  consultation with the State bank supervisor--
  `(i) may include the determination under subsection (d)(1) and the
  conclusions of the reports under section 3602 of the Omnibus Trade and
  Competitiveness Act of 1988 and other reports under subsection (b)(1)
  of this section among the factors the agency considers in evaluating the
  application; and
  `(ii) may issue an order disapproving the activity in question based upon
  that determination and in consultation with the Secretary of the Treasury.
The period for disapproval under clause (ii) may, in the agency's discretion,
be extended for not more than 45 days.
  `(4) FEDERAL APPROVAL- If the transaction is not described in paragraph
  (3)(A), the entity in question shall obtain the prior approval of the
  appropriate Federal banking agency.
  `(5) INFORMING STATE SUPERVISORS- The Secretary of the Treasury shall
  inform State bank supervisors of any determination under subsection (d)(1).
  `(6) EFFECT ON OTHER LAW- Nothing in this subsection shall be construed to
  relieve the entity in question from any otherwise applicable requirement
  of Federal law.
  `(f) NATIONAL TREATMENT DEFINED- A foreign country accords national
  treatment to United States banks and bank holding companies if it offers
  them the same competitive opportunities (including effective market access)
  as are available to its domestic banks and bank holding companies.
  `(g) PERSON OF A FOREIGN COUNTRY DEFINED- A person of a foreign country
  is a person that--
  `(1) is organized under the laws of that country;
  `(2) has its principal place of business in that country;
  `(3) in the case of an individual--
  `(A) is a citizen of that country, or
  `(B) is domiciled in that country; or
  `(4) is directly or indirectly controlled by a person described in paragraph
  (1), (2), or (3).
  `(h) EXERCISE OF DISCRETION- In the exercise of any discretion under
  this section--
  `(1) the Secretary of the Treasury and the Federal banking agencies shall
  act in a manner consistent with the obligations of the United States under
  a bilateral or multilateral agreement governing financial services entered
  into by the President and approved by the Congress; and
  `(2) the Federal banking agencies, in consultation with the Secretary of
  the Treasury--
  `(A) shall consider, with respect to a bank, foreign bank, branch, agency,
  commercial lending company, or other affiliated entity that is a person
  of a foreign country and is already operating in the United States--
  `(i) the extent to which that foreign country has a record of according
  national treatment to United States banks and bank holding companies; and
  `(ii) whether that country would permit United States banks and bank holding
  companies already operating in that country to expand their activities in
  that country even if that country determined that the United States did
  not accord national treatment to that country's banks and bank holding
  companies; and
  `(B) may further differentiate between entities already operating in the
  United States and entities that are not already operating in the United
  States, insofar as such differentiation is consistent with achieving the
  purpose of this section.
  `(i) Limitation on Discretion for Domestic Subsidiaries of Qualifying
  Foreign Banks-
  `(1) IN GENERAL- Notwithstanding any other provision of this section,
  a Federal banking agency may not exercise any discretion under this
  section to deny, and the Secretary of the Treasury may not exercise any
  such discretion so as to require any Federal banking agency to deny,
  any application or notice filed with such agency by, or on behalf of,
  a domestic subsidiary of a qualifying foreign bank.
  `(2) DEFINITIONS- For purposes of this section--
  `(A) DOMESTIC SUBSIDIARY- The term `domestic subsidiary' means any bank,
  commercial lending company, corporation organized or operating under section
  25 or 25(a) of the Federal Reserve Act, savings association (as defined
  in section 2(j) of the Bank Holding Company Act of 1956), or any other
  company chartered or organized under the laws of the United States or any
  State which, on the date of the enactment of the Defense Production Act
  Extension and Amendments of 1991, was controlled, directly or indirectly,
  by a qualifying foreign bank.
  `(B) QUALIFYING BANK- The term `qualifying bank' means any foreign bank
  that is a person of--
  `(i) a foreign country that as of the date of the enactment of the Fair Trade
  in Financial Services Act of 1991, is a member of the European Community; or
  `(ii) Canada.
  `(3) CONDITION OF QUALIFICATION- If the Secretary of the Treasury determines
  that--
  `(A) any enactment or amendment of a banking law, or the adoption or
  amendment of any regulation under any such law, by the European Community or
  any country within the European Community has had the effect of restricting
  the operations or activities of branches or subsidiaries of United States
  banks or bank holding companies in Europe which are permitted under the
  Second Banking Directive, including any restriction on the authority of
  any such branch or subsidiary to expand any operation or activity; and
  `(B) such restriction is not in accordance with national treatment of
  banks or bank holding companies,
the limitation under paragraph (1) on the discretion of the Secretary shall
cease to apply as of the date of such determination with respect to any
domestic subsidiary of any qualifying bank described in paragraph (2)(B)(i).
  `(j) FACTORS TO BE CONSIDERED IN NATIONAL TREATMENT DETERMINATIONS- In
  making any determination under this section with regard to the extent to
  which any foreign country accords national treatment to United States banks
  and bank holding companies, the following factors shall be considered in
  addition to any other factors determined to be appropriate:
  `(1) The effect of lending by the central bank of such country.
  `(2) Access to automated teller machine networks in such country.
  `(3) The effect of regulated deposit interest rates on United States banks
  in such country.
  `(4) The extent to which United States banks and bank holding companies
  may participate in the process of developing regulations, policies,
  guidelines, or other administrative rules with regard to new products,
  services, and markets in such country.
  `(5) Restrictions on branches in such country.
  `(6) The extent to which regulations, policies, guidelines, or other
  administrative rules applicable to United States banks or bank holding
  companies that operate or seek to operate in such country are--
  `(A) issued in writing;
  `(B) prescribed after adequate notice and opportunity for comment;
  `(C) freely available to the public; and
  `(D) considered and finally prescribed in accordance with objective
  standards which prohibit arbitrary and capricious determinations.
  `(7) The extent to which United States banks and bank holding companies
  may participate in the real estate market in such country.
  `(8) The extent to which United States banks and bank holding companies
  may offer foreign exchange services in such country.
  `(9) Capital asset requirements applicable in such country.'.
SEC. 3. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR SECURITIES
BROKERS AND DEALERS.
  The Securities Exchange Act of 1934 (15 U.S.C. 78a et seq.) is amended by
  adding at the end the following new section:
`SEC. 36. NATIONAL TREATMENT.
  `(a) PURPOSE- This section is intended to encourage foreign countries to
  accord national treatment to United States brokers and dealers that operate
  or seek to operate in those countries, and thereby end discrimination
  against United States brokers and dealers.
  `(b) REPORTS REQUIRED-
  `(1) CONTENTS OF REPORT- The Secretary of the Treasury shall, not later
  than December 1, 1992, and biennially thereafter, submit to the Congress
  a report--
  `(A) identifying any foreign country--
  `(i) that does not accord national treatment to United States brokers
  and dealers--
  `(I) according to the most recent report under section 3602 of the Omnibus
  Trade and Competitiveness Act of 1988; or
  `(II) on the basis of more recent information that the Secretary deems
  appropriate indicating a failure to accord national treatment;
  `(ii) whose failure to accord national treatment has a significant impact
  on United States brokers or dealers; and
  `(iii) with respect to which no determination under subsection (d)(1)
  is in effect;
  `(B) explaining why the Secretary has not made, or has rescinded, such a
  determination with respect to that country; and
  `(C) describing the results of any negotiations conducted pursuant to
  subsection (c)(1) with respect to that country.
  `(2) SUBMISSION OF REPORT-
  `(A) IN GENERAL- The report required by paragraph (1) may be submitted
  as part of a report submitted under section 3602 of the Omnibus Trade and
  Competitiveness Act of 1988.
  `(B) MOST RECENT REPORT DEFINED- If the report required by paragraph (1)
  is submitted as part of a report under such section 3602, that report under
  section 3602 shall be the `most recent report' for purposes of paragraph
  (1)(A)(i)(I).
  `(c) NEGOTIATIONS REQUIRED-
  `(1) IN GENERAL- The Secretary of the Treasury shall initiate negotiations
  with any foreign country--
  `(A) in which, according to the most recent report under section 3602 of
  the Omnibus Trade and Competitiveness Act of 1988, there is a significant
  failure to accord national treatment to United States brokers or dealers; and
  `(B) with respect to which no determination under subsection (d)(1) is
  in effect,
to ensure that such country accords national treatment to United States
brokers and dealers.
  `(2) NEGOTIATIONS NOT REQUIRED- Paragraph (1) does not require the Secretary
  of the Treasury to initiate negotiations with a foreign country if the
  Secretary--
  `(A) determines that such negotiations would be fruitless or would impair
  national economic interests; and
  `(B) gives written notice of that determination to the chairman and ranking
  minority member of the Committee on Banking, Housing, and Urban Affairs
  of the Senate and of the Committee on Energy and Commerce of the House
  of Representatives.
  `(d) SANCTIONS-
  `(1) SECRETARY'S DETERMINATION- The Secretary of the Treasury shall publish
  in the Federal Register any determination that a foreign country does not
  accord national treatment to United States brokers or dealers.
  `(2) ACTIONS BY COMMISSION- If the Secretary of the Treasury has published
  in the Federal Register (and has not rescinded) a determination under
  paragraph (1) with respect to a foreign country, the Commission--
  `(A) may include that determination and the conclusions of the reports
  under section 3602 of the Omnibus Trade and Competitiveness Act of 1988 and
  paragraph (1) of this subsection among the factors the Commission considers
  (i) in evaluating any application filed by a person of that foreign country,
  or (ii) in determining whether to prohibit an acquisition for which a notice
  is required under paragraph (3) by a person of that foreign country; and
  `(B) may, only in consultation with the Secretary, deny the application
  or prohibit the acquisition.
  `(3) NOTICE REQUIRED TO ACQUIRE BROKER OR DEALER-
  `(A) IN GENERAL- If the Secretary of the Treasury has published in the
  Federal Register (and has not rescinded) a determination under paragraph
  (1) with respect to a foreign country, no person of that foreign country,
  acting directly or indirectly, shall acquire control of any registered
  broker or dealer unless--
  `(i) the Commission has been given notice 60 days in advance of the
  acquisition, in such form as the Commission shall prescribe by rule and
  containing such information as the Commission requires by rule or order; and
  `(ii) the Commission has not prohibited the acquisition.
  `(B) COMMISSION MAY EXTEND 60-DAY PERIOD- The Commission may, by order,
  extend the notice period during which an acquisition may be prohibited
  under subparagraph (A) for an additional 180 days.
  `(C) EFFECTIVE DATE- The requirements of subparagraph (A) shall apply to
  any acquisition of control that is completed on or after the date on which
  the determination under paragraph (1) is published, irrespective of when
  the acquisition was initiated.
  `(4) REVIEW- The Secretary of the Treasury may, at any time, and shall,
  annually, review any determination under paragraph (1) and decide whether
  that determination should be rescinded.
  `(e) NATIONAL TREATMENT DEFINED- A foreign country accords national treatment
  to United States brokers and dealers if it offers them the same competitive
  opportunities (including effective market access) as are available to its
  domestic brokers and dealers.
  `(f) PERSONS OF A FOREIGN COUNTRY DEFINED- A person of a foreign country
  is a person that--
  `(1) is organized under the laws of that country;
  `(2) has its principal place of business in that country;
  `(3) in the case of an individual--
  `(A) is a citizen of that country; or
  `(B) is domiciled in that country; or
  `(4) is directly or indirectly controlled by a person described in paragraph
  (1), (2), or (3).
  `(g) EXERCISE OF DISCRETION- In the exercise of any discretion under
  this section--
  `(1) the Secretary of the Treasury and the Commission shall act in a manner
  consistent with the obligations of the United States under a bilateral or
  multilateral agreement governing financial services entered into by the
  President and approved by the Congress; and
  `(2) the Commission, in consultation with the Secretary of the Treasury--
  `(A) shall consider, with respect to a broker or dealer that is a person
  of a foreign country and is already operating in the United States--
  `(i) the extent to which that foreign country has a record of according
  national treatment to United States brokers and dealers; and
  `(ii) whether that country would permit United States brokers or dealers
  already operating in that country to expand their activities in that
  country even if that country determined that the United States did not
  accord national treatment to that country's brokers or dealers; and
  `(B) may further differentiate between entities already operating in the
  United States and entities that are not already operating in the United
  States, insofar as such differentiation is consistent with achieving the
  purpose of this section.
  `(h) LIMITATION ON DISCRETION FOR QUALIFYING SECURITIES BROKERS AND DEALERS-
  `(1) IN GENERAL- Notwithstanding any other provision of this section,
  the Commission may not exercise any discretion under this section to deny,
  and the Secretary of the Treasury may not exercise any such discretion so
  as to require the Commission to deny, any application or notice filed with
  such agency by, or on behalf of, a domestic subsidiary of a qualifying
  foreign Securities Broker or Dealer.
  `(A) QUALIFYING- The term qualifying Securities Broker or Dealer means
  any foreign bank that is a person of--
  `(i) a foreign country that, as of the date of the enactment of the Fair
  Trade in Financial Services Act of 1991, is a member of the European
  Community; or
  `(ii) Canada.
  `(2) CONDITION OF QUALIFICATION- If the Secretary of the Treasury determines
  that--
  `(A) any enactment or amendment of a law, or the adoption or amendment
  of any regulation under any such law, by the European Community or any
  country within the European Community has had the effect of restricting
  the operations or activities of branches or subsidiaries of United States
  Securities Broker or Dealer in Europe which are permitted under the Second
  Banking Directive, including any restriction on the authority of any such
  branch or subsidiary to expand any operation or activity; and
  `(B) such restriction is not in accordance with national treatment of
  Securities Broker or Dealer the limitation under paragraph (1) on the
  discretion of the Secretary shall cease to apply as of the date of such
  determination with respect to any domestic subsidiary of any qualifying
  Securities Broker or Dealer described in paragraph (2)(B)(i).
  `(i) FACTORS TO BE CONSIDERED IN NATIONAL TREATMENT DETERMINATIONS- In
  making any determination under this section with regard to the extent
  to which any foreign country accords national treatment to United States
  brokers and dealers, the following factors shall be considered in addition
  to any other factors determined to be appropriate:
  `(1) Limits on margin accounts of nonresident investors.
  `(2) Effective barriers to participation by United States brokers and
  dealers in the commercial paper market in such country.
  `(3) The extent to which United States brokers and dealers have adequate
  note of and may participate in the process of developing regulations,
  policies, guidelines, or other administrative or market rules.
  `(4) The extent of regulatory and de facto limitations on participation by
  United States brokers and dealers in securities underwriting in such country.
  `(5) Restrictions on branches in such country.
  `(6) The extent to which regulations, policies, guidelines, or other
  administrative, exchange, or market rules applicable to United States
  brokers and dealers that operate or seek to operate in such country are--
  `(A) issued in writing;
  `(B) prescribed after adequate notice and opportunity for comment;
  `(C) freely available to the public; and
  `(D) considered and finally prescribed in accordance with objective
  standards which prohibit arbitrary and capricious determinations.
  `(7) The extent of limits on the introduction of new products by United
  States brokers and dealers.'.
SEC. 4. EFFECTUATING THE PRINCIPLE OF NATIONAL TREATMENT FOR INVESTMENT
ADVISERS.
  The Investment Advisers Act of 1940 (12 U.S.C. 80b-1 et seq.) is amended
  by adding at the end the following new section:
`SEC. 223. NATIONAL TREATMENT.
  `(a) PURPOSE- This section is intended to encourage foreign countries to
  accord national treatment to United States investment advisers that operate
  or seek to operate in those countries, and thereby end discrimination
  against United States investment advisers.
  `(b) REPORTS REQUIRED-
  `(1) CONTENTS OF REPORT- The Secretary of the Treasury shall, not later
  than December 1, 1992, and biennially thereafter, submit to the Congress
  a report--
  `(A) identifying any foreign country--
  `(i) that does not accord national treatment to United States investment
  advisers--
  `(I) according to the most recent report under section 3602 of the Omnibus
  Trade and Competitiveness Act of 1988; or
  `(II) on the basis of more recent information that the Secretary deems
  appropriate indicating a failure to accord national treatment;
  `(ii) whose failure to accord national treatment has a significant impact
  on United States investment advisers; and
  `(iii) with respect to which no determination under subsection (d)(1)
  is in effect;
  `(B) explaining why the Secretary has not made, or has rescinded, such a
  determination with respect to that country; and
  `(C) describing the results of any negotiations conducted pursuant to
  subsection (c)(1) with respect to that country.
  `(2) SUBMISSION OF REPORT-
  `(A) IN GENERAL- The report required by paragraph (1) may be submitted
  as part of a report submitted under section 3602 of the Omnibus Trade and
  Competitiveness Act of 1988.
  `(B) MOST RECENT REPORT DEFINED- If the report required by paragraph (1)
  is submitted as part of a report under such section 3602, that report under
  section 3602 shall be the `most recent report' for purposes of paragraph
  (1)(A)(i)(I).
  `(c) NEGOTIATIONS REQUIRED-
  `(1) IN GENERAL- The Secretary of the Treasury shall initiate negotiations
  with any foreign country--
  `(A) in which, according to the most recent report under section 3602 of the
  Omnibus Trade and Competitiveness Act of 1988, there is a significant failure
  to accord national treatment to United States investment advisers; and
  `(B) with respect to which no determination under subsection (d)(1) is in
  effect, to ensure that such country accords national treatment to United
  States investment advisers.
  `(2) NEGOTIATIONS NOT REQUIRED- Paragraph (1) does not require the Secretary
  of the Treasury to initiate negotiations with a foreign country if the
  Secretary--
  `(A) determines that such negotiations would be fruitless or would impair
  national economic interests; and
  `(B) gives written notice of that determination to the chairman and ranking
  minority member of the Committee on Banking, Housing, and Urban Affairs
  of the Senate and of the Committee on Energy and Commerce of the House
  of Representatives.
  `(d) SANCTIONS-
  `(1) SECRETARY'S DETERMINATION- The Secretary of the Treasury shall publish
  in the Federal Register any determination that a foreign country does not
  accord national treatment to United States investment advisers.
  `(2) ACTIONS BY COMMISSION- If the Secretary of the Treasury has published
  in the Federal Register (and has not rescinded) a determination under
  paragraph (1) with respect to a foreign country, the Commission--
  `(A) may include that determination and the conclusions of the reports
  under section 3602 of the Omnibus Trade and Competitiveness Act of 1988 and
  paragraph (1) of this subsection among the factors the Commission considers
  (i) in evaluating any application filed by a person of that foreign country,
  or (ii) in determining whether to prohibit an acquisition for which a notice
  is required under paragraph (3) by a person of that foreign country; and
  `(B) may, only in consultation with the Secretary, deny the application
  or prohibit the acquisition.
  `(3) NOTICE REQUIRED TO ACQUIRE INVESTMENT ADVISER-
  `(A) IN GENERAL- If the Secretary of the Treasury has published in the
  Federal Register (and has not rescinded) a determination under paragraph
  (1) with respect to a foreign country, no person of that foreign country,
  acting directly or indirectly, shall acquire control of any registered
  investment adviser unless--
  `(i) the Commission has been given notice 60 days in advance of the
  acquisition, in such form as the Commission shall prescribe by rule and
  containing such information as the Commission requires by rule or order; and
  `(ii) the Commission has not prohibited the acquisition.
  `(B) COMMISSION MAY EXTEND 60-DAY PERIOD- The Commission may, by order,
  extend the notice period during which an acquisition may be prohibited
  under subparagraph (A) for an additional 180 days.
  `(C) EFFECTIVE DATE- The requirements of subparagraph (A) shall apply to
  any acquisition of control that is completed on or after the date on which
  the determination under paragraph (1) is published, irrespective of when
  the acquisition was initiated.
  `(4) REVIEW- The Secretary of the Treasury may, at any time, and shall,
  annually, review any determination under paragraph (1) and decide whether
  that determination should be rescinded.
  `(e) NATIONAL TREATMENT DEFINED- A foreign country accords national treatment
  to United States investment advisers if it offers them the same competitive
  opportunities (including effective market access) as are available to its
  domestic investment advisers.
  `(f) PERSONS OF A FOREIGN COUNTRY DEFINED- A person of a foreign country
  is a person that--
  `(1) is organized under the laws of that country;
  `(2) has its principal place of business in that country;
  `(3) in the case of an individual--
  `(A) is a citizen of that country; or
  `(B) is domiciled in that country; or
  `(4) is directly or indirectly controlled by a person described in paragraph
  (1), (2), or (3).
  `(g) EXERCISE OF DISCRETION- In the exercise of any discretion under
  this section--
  `(1) the Secretary of the Treasury and the Commission shall act in a manner
  consistent with the obligations of the United States under a bilateral or
  multilateral agreement governing financial services entered into by the
  President and approved by the Congress; and
  `(2) the Commission, in consultation with the Secretary of the Treasury--
  `(A) shall consider, with respect to an investment adviser that is a person
  of a foreign country and is already operating in the United States--
  `(i) the extent to which that foreign country has a record of according
  national treatment to United States investment advisers; and
  `(ii) whether that country would permit United States investment advisers
  already operating in that country to expand their activities in that
  country even if that country determined that the United States did not
  accord national treatment to that country's investment advisers; and
  `(B) may further differentiate between entities already operating in the
  United States and entities that are not already operating in the United
  States, insofar as such differentiation is consistent with achieving the
  purpose of this section.
  `(h) LIMITATION ON DISCRETION FOR QUALIFYING INVESTMENT ADVISERS-
  `(1) IN GENERAL- Notwithstanding any other provision of this section,
  the Commission may not exercise any discretion under this section to deny,
  and the Secretary of the Treasury may not exercise any such discretion so
  as to require the Commission to deny, any application or notice filed with
  such agency by, or on behalf of, a domestic subsidiary of a qualifying
  foreign investment adviser.
  `(2) DEFINITIONS- For purposes of this section--
  `(A) QUALIFYING- The term qualifying means any foreign investment adviser
  that is a person of--
  `(i) a foreign country that as of the date of the enactment of the Fair Trade
  in Financial Services Act of 1991, is a member of the European Community; or
  `(ii) Canada.
  `(3) CONDITION OF QUALIFICATION- If the Secretary of the Treasury determines
  that--
  `(A) any enactment or amendment of a law, or the adoption or amendment
  of any regulation under any such law, by the European Community or any
  country within the European Community has had the effect of restricting
  the operations or activities of branches or subsidiaries of United States
  investment advisers in Europe which are permitted under the Second Banking
  Directive, including any restriction on the authority of any such branch
  or subsidiary to expand any operation or activity; and
  `(B) such restriction is not in accordance with national treatment investment
  advisers the limitation under paragraph (1) on the discretion of the
  Secretary shall cease to apply as of the date of such determination with
  respect to any domestic subsidiary of any qualifying investment adviser
  described in paragraph (2)(B)(i).
  `(i) FACTORS TO BE CONSIDERED IN NATIONAL TREATMENT DETERMINATIONS- In
  making any determination under this section with regard to the extent
  to which any foreign country accords national treatment to United States
  investment advisers, the following factors shall be considered in addition
  to any other factors determined to be appropriate:
  `(1) The effect of pension asset distribution restrictions on United States
  investment advisers.
  `(2) The extent of limits on new entries into the management of investment
  companies, investment trusts, and related businesses in such country.
  `(3) The extent to which regulations, policies, guidelines, or other
  administrative rules applicable to United States investment advisers that
  operate or seek to operate in such country are--
  `(A) issued in writing;
  `(B) prescribed after adequate notice and opportunity for comment;
  `(C) freely available to the public; and
  `(D) considered and finally prescribed in accordance with objective
  standards which prohibit arbitrary and capricious determinations.'.
SEC. 5. FINANCIAL INTERDEPENDENCE STUDY.
  Subtitle G of title III of the Omnibus Trade and Competitiveness Act of
  1988 (22 U.S.C. 5341 et seq.) is amended by adding at the end the following
  new section:
`SEC. 3605. FINANCIAL INTERDEPENDENCE STUDY.
  `(a) INVESTIGATION REQUIRED- The Secretary of the Treasury, in consultation
  and coordination with the Securities and Exchange Commission, the Board of
  Governors of the Federal Reserve System, the appropriate Federal banking
  agencies (as defined in section 3 of the Federal Deposit Insurance Act),
  and any other appropriate Federal agency or department to be designated by
  the Secretary of the Treasury, shall conduct an investigation to determine
  the extent of the interdependence of the financial services sectors of the
  United States and foreign countries whose financial services institutions
  provide financial services in the United States, or whose persons have
  substantial ownership interests in United States financial services
  institutions, and the economic, strategic, and other consequences of that
  interdependence for the United States.
  `(b) REPORT-
  `(1) REPORT REQUIRED- The Secretary of the Treasury shall transmit a report
  on the results of the investigation under subsection (a) within 2 years after
  the date of enactment of this section to the President, the Congress, the
  Securities and Exchange Commission, the Board of Governors of the Federal
  Reserve System, the appropriate Federal banking agencies (as defined in
  section 3 of the Federal Deposit Insurance Act) and any other appropriate
  Federal agency or department as designated by the Secretary of the Treasury.
  `(2) CONTENTS OF REPORT- The report required under paragraph (1) shall--
  `(A) describe the activities and estimate the scope of financial services
  activities conducted by United States financial services institutions in
  foreign markets (differentiated according to major foreign markets);
  `(B) describe the activities and estimate the scope of financial services
  activities conducted by foreign financial services institutions in the
  United States (differentiated according to the most significant home
  countries or groups of home countries);
  `(C) estimate the number of jobs created in the United States by financial
  services activities conducted by foreign financial services institutions
  and the number of jobs created in foreign countries by financial services
  activities conducted by United States financial services institutions;
  `(D) estimate the additional jobs and revenues (both foreign and domestic)
  that would be created by the activities of United States financial
  services institutions in foreign countries if those countries offered
  such institutions the same competitive opportunities (including effective
  market access) as are available to those countries' domestic financial
  services institutions;
  `(E) describe the extent to which foreign financial services institutions
  discriminate against United States persons in procurement, employment,
  providing credit or other financial services, or otherwise;
  `(F) describe the extent to which foreign financial services institutions
  and other persons from foreign countries purchase or otherwise facilitate the
  marketing from the United States of government and private debt instruments
  and private equity instruments;
  `(G) describe how the interdependence of the financial services sectors
  of the United States and foreign countries affects the autonomy and
  effectiveness of United States monetary policy;
  `(H) describe the extent to which United States companies rely on financing
  by or through foreign financial services institutions, and the consequences
  of such reliance (including disclosure of proprietary information) for
  the industrial competitiveness and national security of the United States;
  `(I) describe the extent to which foreign financial services institutions, in
  purchasing high technology products such as computers and telecommunications
  equipment, favor manufacturers from their home countries over United States
  manufacturers; and
  `(J) contain other appropriate information relating to the results of the
  investigation under subsection (a).
  `(c) DEFINITIONS- For purposes of this section, the term `financial services
  institution' means--
  `(1) a broker, dealer, underwriter, clearing agency, transfer agent, or
  information processor with respect to securities, including government
  and municipal securities;
  `(2) an investment company, investment manager, investment adviser,
  indenture trustee, or any depository institution, insurance company,
  or other organization operating as a fiduciary, trustee, underwriter,
  or other financial services provider;
  `(3) any depository institution or depository institution holding company
  (as such terms are defined in section 3 of the Federal Deposit Insurance
  Act); and
  `(4) any other entity providing financial services.'.
SEC. 6. CONFORMING AMENDMENTS SPECIFYING THAT NATIONAL TREATMENT INCLUDES
EFFECTIVE MARKET ACCESS.
  (a) QUADRENNIAL REPORTS ON FOREIGN TREATMENT OF UNITED STATES FINANCIAL
  INSTITUTIONS- Section 3602 of the Omnibus Trade and Competitiveness Act
  of 1988 (22 U.S.C. 5352) is amended--
  (1) in paragraph (3), by striking `and securities companies' and inserting
  `, securities companies, and investment advisers'; and
  (2) by adding at the end the following: `For purposes of this section, a
  foreign country denies national treatment to United States entities unless
  it offers them the same competitive opportunities (including effective
  market access) as are available to its domestic entities.'.
  (b) NEGOTIATIONS TO PROMOTE FAIR TRADE IN FINANCIAL SERVICES- Section
  3603(a)(1) of the Omnibus Trade and Competitiveness Act of 1988 (22
  U.S.C. 5353(a)(1)) is amended by inserting `effective' after `banking
  organizations and securities companies have'.
  (c) PRIMARY DEALERS IN GOVERNMENT DEBT INSTRUMENTS- Section 3502(b)(1) of the
  Omnibus Trade and Competitiveness Act of 1988 (22 U.S.C. 5342) is amended--
  (1) by striking `does not accord to' and inserting `does not offer';
  (2) by inserting `(including effective market access)' after `the same
  competitive opportunities in the underwriting and distribution of government
  debt instruments issued by such country'; and
  (3) by striking `as such country accords to' and inserting `as are
  available to'.