Wednesday, June 17, 2009

Jefferies filling the shoes of Bear, Lehman, and Merrill

Press release form the Fed:
Effective June 18, 2009, Jefferies & Company, Inc. has been added to the list of primary dealers.

List of the Primary Government Securities Dealers Reporting to the Government Securities Dealers Statistics Unit of the Federal Reserve Bank of New York

BNP Paribas Securities Corp.
Banc of America Securities LLC
Barclays Capital Inc.
Cantor Fitzgerald & Co.
Citigroup Global Markets Inc.
Credit Suisse Securities (USA) LLC
Daiwa Securities America Inc.
Deutsche Bank Securities Inc.
Dresdner Kleinwort Securities LLC
Goldman, Sachs & Co.
HSBC Securities (USA) Inc.
Jefferies & Company, Inc.
J. P. Morgan Securities Inc.
Mizuho Securities USA Inc.
Morgan Stanley & Co. Incorporated
RBS Securities Inc.
UBS Securities LLC.

Apparently MF Global, Nomura, and RBC are next, although next on the list should really be the two Japanese guys going on vacation to Switzerland - they deal in more treasuries than any of the dealers above.

In all seriousness, this is a big deal. We have not had a new primary dealer since 06. And this time it’s not a large bank but a mid-size broker/advisor. The Treasury and the Fed need to be adding. Think about it, we lost Bear, Lehman, and Merrill. The Treasury needs a deeper distribution network for all the upcoming auctions, and the Fed needs more liquidity providers for all the purchasing they will be doing (and presumably eventually all the selling).
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