PACIFIC WATCH

JAPAN: Three U.S. securities firms are gearing up to compete in a Tokyo foreign exchange market that has already exacted a heavy toll on foreign banks. Japan’s Ministry of Finance paved the way for Salomon Bros., Goldman, Sachs & Co. and Morgan Stanley to start currency trading by granting their European banking subsidiaries branch status. The three will avoid trying to battle the major Japanese banks that dominate the Tokyo market. The licensing of the branches marks the first time the ministry has allowed subsidiaries of foreign securities companies to operate banks in Japan. The firms are applying for foreign exchange licenses. Under laws unique to Japan among major financial centers, foreign exchange trade has been largely limited to banks.