Section 5 and 5a of the Act;
The Division of Trading and Markets (Division) issued a letter granting no-action relief to permit The Sydney Futures Exchange Limited (SFE) and the New Zealand Futures and Options Exchange Limited (NZFOE) to make their electronic trading and order matching system, known as SYCOM?, available to their members in the US without obtaining contract market designation pursuant to Sections 5 and 5a of the CEA. Specifically, the Division agreed not to recommend that the Commission institute enforcement action against the SFE, the NZFOE, or their members if: (1) SFE and NZFOE members trade for their proprietary accounts through SYCOM? terminals located in the US; (2) SFE and NZFOE members who are registered futures commission merchants (FCMs) or who are exempt from registration pursuant to Rule 30.10 (Rule 30.10 Firms) submit orders from US customers through SYCOM? terminals located in the US; and/or (3) SFE and NZFOE members who are registered FCMs or Rule 30.10 Firms accept orders through AORSs from US customers for submission to SYCOM?. The Division's no-action position is limited to the contracts specifically delineated in the letter and is subject to compliance with the terms and conditions set forth therein. The conditions include: (1) only SFE and NZFOE members and their affiliates will have direct access to SYCOM?; (2) SFE and NZFOE members that are not registered FCMs or Rule 30.10 Firms will be permitted to transmit orders through SYCOM? only for their proprietary accounts; (3) orders for US customers accepted through an AORS and/or transmitted by SFE or NZFOE members through SYCOM? will be intermediated by an SFE or NZFOE member that is either a registered FCM or a Rule 30.10 Firm; (4) the SFE will continue to satisfy the criteria for designation as an approved futures exchange under applicable Australian law, and the NZFOE will continue to satisfy the criteria for designation as an authorized futures market under applicable New Zealand law; (5) applicable Australian and New Zealand law will continue to require the SFE and NZFOE to maintain fair and orderly markets; prohibit abusive practices, and market manipulation; and provide for oversight of the exchanges by appropriate regulatory authorities; (6) the SFE and NZFOE will employ reasonable procedures for monitoring and enforcing compliance with the terms and conditions of the no-action relief; (7) the SFE, the NZFOE, and SYCOM?, will continue to adhere to the IOSCO Principles for Screen-Based Trading; (8) SFE and NZFOE members that are not registered FCMs will be required to represent, in writing, that they submit to the Commission's jurisdiction with respect to activities conducted pursuant to the no-action relief; (9) the SFE, the NZFOE, and those SFE and NZFOE members that are not registered FCMs will appoint an agent for service of process in the US; (10) SFE and NZFOE members that are not registered FCMs who are operating pursuant to the no-action relief represent that they will provide access to the books and records maintained at their US offices and to the premises where SYCOM? is installed or used in the US, upon request; (11) the SFE and the NZFOE will submit to the Commission, both quarterly and upon request, specified trade volume information and a listing of the names and US business addresses of their members that have access to SYCOM? in the US; (12) the SFE and the NZFOE promptly will provide written notice to the Division of: (a) material changes in the information in their no-action request; (b) material changes in their rules or relevant Australian or New Zealand rules or laws; (c) known matters that may affect the financial or operational viability of the SFE or the NZFOE; (d) the default, insolvency, or bankruptcy of any SFE or NZFOE member known to either the SFE or the NZFOE that may have a material, adverse impact upon the SFE or the NZFOE, their clearing system, or a US customer or firm; (e) known violations of the terms or conditions of the no-action relief; and (f) specified disciplinary actions taken by the SFE or the NZFOE against members operating pursuant to the no-action relief; (13) satisfactory information-sharing arrangements between the Commission, the Australian Securities and Investments Commission, and the New Zealand Securities Commission will remain in effect; (14) the SFE and the NZFOE will provide certain information directly to the Commission, and the Commission will be able to obtain sufficient information regarding the SFE, the NZFOE, and their members operating pursuant to the no-action relief necessary to evaluate the continued eligibility of the SFE, the NZFOE, or their members for the no-action relief; to enforce compliance with the terms and conditions of the relief; or to enable the Commission to carry out its regulatory duties. The Division retained the authority to condition further, modify, suspend, terminate or otherwise restrict the terms of the no-action relief, in its discretion.