Most of the primary dealers are owned by either U.S. or foreign banking organizations that have been approved as U.S. financial holding companies. The U.S. financial holding companies owning primary dealers are subject to consolidated supervision by the Federal Reserve, but for the primary dealers within financial holding companies we rely extensively on the Securities and Exchange Commission (SEC) as functional regulator.
The SEC, rather than the Federal Reserve, serves as consolidated supervisor for the major U.S. investment banks with primary dealers. In connection with the establishment of the PDCF, we created a program to monitor the financial and funding positions of primary dealers, focusing on those primary dealers not owned by financial holding companies.