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Memoranda of Understanding

  • 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 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
    The CFTC Memorandum of Understanding covers the sharing of related technical assistance.

    Information Sharing with U.S. Government Agencies
    The CFTC-SEC Memorandum of Understanding covers the oversight of security futures product (SFP) trading and the sharing of security futures product information.

    Multilateral Arrangements and Other Cooperation
    The 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.

    Supervision of Alternative Investment Fund Industry
    The CFTC and authorities in the European Union (“EU”) and European Economic Area (“EEA”) signed MOUs establishing a cooperative framework for the supervision of entities subject to the EU Alternative Investment Fund Managers Directive. The framework also provides for cooperation with respect to commodity pool operators, commodity trading advisors and commodity pools. Through these MOUs, the signatories commit to working together through ongoing informal consultations and formal cooperation, including: the exchange of information, cooperation with respect to on-site visits, and mutual assistance.

See Also:

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