Memoranda of Understanding

December 6th, 2014

The CFTC cooperates with foreign regulatory and enforcement authorities through formal Memoranda of Understanding (MOUs) and other arrangements to combat cross-border fraud and other illegal practices that could harm customers or threaten market integrity.

Cross-border information sharing among market authorities plays an integral role in the effective surveillance of global markets that are linked by products, participants, and technology. Information sharing arrangements can be critical in combating cross-border fraud and manipulation, addressing the financial risks of market participants, and sharing regulatory expertise on market oversight and supervision. The CFTC makes and receives a significant number of requests for assistance and information to and from foreign authorities in connection with various surveillance and enforcement issues.

The CFTC has entered into MOUs and cooperative arrangements with many jurisdictions, including cooperative enforcement arrangements, arrangements relating to sharing financial and other types of fitness information, and arrangements for sharing information on matters related to the implementation of the CFTC’s Part 30 rules, which grant foreign firms an exemption from certain CFTC requirements.

Cooperative Enforcement

The CFTC has entered into arrangements for cooperative enforcement with authorities in more than 20 jurisdictions. MOUs typically provide for access to non-public documents and information already in the possession of the authorities and often include undertakings to obtain documents and to take testimony of, or statements from, witnesses on behalf of a requesting authority. CFTC MOUs are public documents, and copies may be obtained from the Office of the Secretariat.

Information Sharing for Supervisory, Prudential, and Risk Assessment Purposes and Regulation of Cross-border Futures  and Clearing Activity

These arrangements facilitate information sharing for supervisory, prudential, and risk-assessment purposes. They establish a framework for cooperation and assistance in regulation of cross-border futures and clearing activity that includes sharing routine audit information, cooperation in conducting on-site examinations, information sharing regarding the underlying reference value or supply of a product covered by a futures contract, and sharing of fitness and financial information on intermediaries, clearing organizations and other registered entities.

Financial Information Sharing Memoranda of Understanding

Financial information sharing memoranda of understanding (FISMOUs) now include risk assessment of related firms located in different jurisdictions. FISMOUs originally provided a basis for exempting firms from the application of one jurisdiction’s capital requirements in deference to the applicability of home state requirements together with exchange of information.

Information Sharing Related to Technical Assistance

Information Sharing with U.S. Government Agencies

  • CFTC and U.S. Securities and Exchange Commission (SEC)
    Memorandum of Understanding Regarding the Oversight of Security Futures Product Trading and the Sharing of Security Futures Product Information, March 17, 2004The CFTC-SEC Memorandum of Understanding covers the oversight of security futures product (SFP) trading and the sharing of security futures product information. Pursuant to the Commodity Futures Modernization Act of 2000 the CFTC and the SEC have joint authority for the oversight and regulation of security futures products. With respect to security futures products, the MOU provides that the CFTC and the SEC will notify each other of any planned examinations, advise the other of reasons for an intended examination, provide each other with examination-related information, and conduct examinations jointly, if feasible. The CFTC and the SEC will also notify each other of significant issues arising from these markets and share trading data and related information for SFP activity. Implementation of this MOU should serve to increase the effectiveness and efficiency of the joint CFTC/SEC oversight of SFPs. In November 2002, OneChicago and NQLX began trading these products under the joint supervision of the agencies. The sharing of information and coordination recognized under this memorandum is an important element in providing oversight that is effective but avoids unnecessary regulatory burdens.

Multilateral Arrangements and Other Cooperation

  • Memorandum of Understanding Concerning Consultation, Cooperation and the Exchange of Information of the International Organization of Securities Commissions, October 16, 2003The IOSCO MOU is the first worldwide multilateral enforcement cooperation arrangement among securities and derivatives regulators. The IOSCO MOU provides for the exchange of essential information to investigate cross-border securities and derivatives violations, including the most serious offenses, such as manipulation, insider trading and customer fraud. The MOU enables regulators to share critical information, including bank, brokerage, and client identification records and to use that information in civil and criminal prosecutions. (For more information, see CFTC News Release 4851-03, October 16, 2003.)

    Signatories: Alberta: Alberta Securities Commission; Australia: Australian Securities and Investments Commission; British Columbia: British Columbia Securities Commission; France: Commission des opérations de bourse; Germany: Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin); Greece: Capital Market Commission; Hong Kong: Securities and Futures Commission; Hungary: Hungarian Financial Supervisory Authority; India: Securities and Exchange Board of India (SEBI); Italy: Commissione Nazionale per le Società e la Borsa; Jersey: Jersey Financial Services Commission; Lithuania: Lithuanian Securities Commission; Mexico: Comisión Nacional Bancaria y de Valores; New Zealand:New Zealand Securities Commission; Ontario: Ontario Securities Commission; Poland: Polish Securities and Exchange Commission; Portugal: Comissão do Mercado de Valores Mobiliários; Quebec: Commission des valeurs mobilières du Québec; Spain: Comisión Nacional del Mercado de Valores; South Africa: Financial Services Board; Turkey: Capital Markets Board; United Kingdom: Financial Services Authority; nited States of America: United States Commodity Futures Trading Commission (CFTC); United States of America: United States Securities and Exchange Commission (SEC).

 

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