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Banking Interpretations

March 26, 2001

[                           ]

Re: Agency Transactional Services Performed by New York Branch

Dear [          ]:

Your letter dated November 9, 2000 to Deputy Superintendent and Counsel Sara Kelsey has been referred to me for reply.  In your letter you express that [               ] wishes to provide "agency transactional services" through its New York Branch ("Branch") for Bank's foreign based customers.   As we understand it, Branch would act solely as agent for said customers on their instruction in the purchase and sale of futures contracts and related options contracts for non-financial commodities including, but not limited to, grain, soybeans, heating oil, crude oil, propane, platinum, gold, silver, palladium, and copper. 

The Banking Department views the proposed activity as analogous to that of a bank executing a securities transaction solely upon the order of a customer, an activity the Department has deemed permissible for State-chartered banks and trust companies to engage in since it is considered incidental to the business of banking.  Moreover, since the Department is committed to ensuring that our State-chartered institutions remain competitive with their federally-chartered counterparts, we often refer to the list of activities which the Office of the Comptroller of the Currency ("OCC") has deemed permissible for national banks to engage in.  As you are aware, the OCC has authorized national banks to act, generally, as agent for customers in the purchase and sale of futures contracts and related options contracts on non-financial commodities, including soybeans, heating oil, crude oil, gasoline, propane, platinum, palladium and copper.[1]

For the most part, under the New York Banking Law as it has been interpreted by this Department, a branch's powers are coextensive with those of New York State-chartered banks.  Providing agency transactional services is an activity the Banking Department would sanction for State-chartered banks and trust companies.  Accordingly, we conclude it is permissible for Branch to also engage in this activity. 

I trust that the foregoing as been responsive.  Should you have any further questions, please feel free to contact me at (212) 618-6453.

Sincerely Yours,

Jay Kane,
Assistant Counsel


[1] OCC Interpretive Letter No. 494 (December 20, 1989).  See also, OCC Interpretive Letter No. 507) (May 5, 1990).

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