On 3 February 2025, SMBC Nikko Securities America, Inc. (SMBC Nikko America), a registered broker-dealer and direct subsidiary of SMBC Americas Holdings, Inc., was designated as a primary dealer by the Federal Reserve Bank of New York.
This designation positions SMBC Nikko America among an exclusive group of 25 financial institutions authorised to engage directly with the New York Fed in implementing US monetary policy.
Primary dealers are obligated to participate in open market operations, bid on US Treasury auctions, and provide the New York Fed with market intelligence. Their activities support the effective execution of monetary policy and contribute to the liquidity and stability of financial markets.
SMBC Nikko’s choice to join the 25-strong roaster of primary dealers contrasts with Citadel Securities’ decision in September 2024 they decided against pursuing a primary dealer status, citing the diminishing benefits relative to regulatory requirements.
To become and maintain status as a primary dealer with the Federal Reserve Bank of New York, a firm must meet specific regulatory requirements. These include being a registered broker-dealer with the Securities and Exchange Commission (SEC) or a state or federally chartered bank subject to official supervision. The firm must also satisfy minimum capital standards, such as holding at least US$150 million in regulatory net capital for broker-dealers. Additionally, primary dealers are expected to participate consistently in open market operations, bid on a pro-rata basis in all Treasury auctions at competitive prices, and provide regular market activity reports to the New York Fed.
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