New York has many of the specialized institutions usually found in an international financial center. These include foreign exchange brokers and dealers, who formerly constituted a significant element in the foreign exchange market. It also has factoring companies and other financial organizations which buy accounts receivable arising out of foreign trade and engage in various other special types of transactions. Other New York firms directly connected with foreign trade and the international money market include numerous customs brokers, forwarding agencies, and export and import representatives.
Acceptance and discount houses, which accept or discount bills arising out of international trade, may play a considerable role in an international financial center. This phase of business has not been as fully developed in New York as in London. In New York the role of these institutions in international finance is of minor importance and at present the companies originally established to create and discount acceptances specialize in the buying and selling of United States Government obligations and commercial paper.
INVESTMENT BANKERS, BROKERS, AND DEALERS
A world financial center must also be a market for long-term capital. During the 1920's, New York was more of an international capital market than a money market. With the revival of international investment in the postwar period, the role of New York in this field has again assumed major importance.
The most important institutions of the capital market are the investment firms that originate and distribute securities. In the United States the houses which usually engage in the underwriting of foreign securities also play an important role in the domestic field. New York's investment banking institutions have substantial resources, experienced personnel, and well-organized channels for the distribution of foreign securities.
New York also has numerous brokerage and dealer firms which handle both domestic and foreign securities. Formerly, some of these houses were also active in international arbitrage in foreign exchange. Some engage in buying and selling foreign securities even when they are not listed on an American stock exchange. When the foreign exchange restrictions in the leading countries have been further relaxed, the activities of these houses will probably increase and issues of foreign corporations will very likely be listed on the New York Stock Exchange. The New York firms and banks dealing in Government securities also serve foreign clients.
INSTITUTIONAL INVESTORS
Another segment of the capital market is the large investing institutions. These include the life insurance companies, fire and casualty insurance companies, investment trusts, savings banks, and trust companies. In contrast with London, where such institutions in the past bought large amounts of foreign securities, most of the institutional investors in the United States are either prevented by law from acquiring such securities or may purchase them only in limited amounts. Some of the large institutional investors, however, are important buyers of Canadian and International Bank bonds.
LARGE CORPORATIONS
New York City is the headquarters for many large corporations that have substantial foreign interests. In making direct investments abroad, these companies transfer large sums to foreign countries. This applies particularly to companies in the petroleum, chemical, nonferrous metals, automobile, machine tool, and textile industries. The need for American capital goods abroad is very great and unless world political conditions deteriorate it may be assumed that many American corporations will broaden their foreign operations in the years ahead. This will increase the international activities of the financial institutions of New York.
SECURITY MARKETS
The broad and active security markets of New York contribute to its stature as an international center. Foreign capital is attracted to New York for investment, not only in the corporate securities listed on the New York and American Stock Exchanges but also in unlisted issues and in United States Treasury obligations. The transactions of foreign investors in United States security markets broaden considerably the scope of the New York capital market.
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