At a time when Wall Street banks say they’re running out of reasons to trade with the U.S. government, Wells Fargo is jumping into the market.
Bloomberg News reports that for Wells Fargo, though, it’s not so much about dealing with the U.S. itself as it is about the other major clients that can be won over once a bank has earned its primary-dealer credentials. The world’s central banks, a growing force in bond markets everywhere, prefer to trade with institutions that are designated trading partners with the Federal Reserve. People with direct knowledge of Wells Fargo’s decision said that it was this sizable investor group that prompted them to sign up.
“There are some large investors that will only do business with a primary dealer,” said Kevin McPartland, head market-structure analyst with financial-services consulting firm Greenwich Associates. “The intangible credibility that comes along with that is valuable.”
The brokerage arm of Wells Fargo became the 23rd primary dealer on April 18, joining a select group that bids at Treasury auctions and helps the Fed carry out policy.
To access the complete Bloomberg News article hit the link below: