Commodity Futures Trading Commission
Office of External Affairs (202) 418-5080
Three Lafayette Centre
1155 21st Street, NW
Washington, DC 20581

Release: #4901-04
For Release: March 17, 2004

CFTC and SEC Sign Memorandum of Understanding Regarding the Oversight of Security Futures Product Trading and the Sharing of Security Futures Product Information

Washington, D.C. -- Commodity Futures Trading Commission (CFTC) Chairman James E. Newsome and Securities and Exchange Commission (SEC) Chairman William H. Donaldson today signed a Memorandum of Understanding (MOU) regarding 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 (CFMA) the CFTC and the SEC have joint authority for the oversight and regulation of security futures products. 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.

In signing the MOU, CFTC Chairman Newsome said: “It gives me great pleasure to sign this MOU, which I believe will result in more effective and efficient joint CFTC and SEC oversight of security futures products while, at the same time, avoiding unnecessary regulatory burdens on market participants. I thank Commissioner Walt Lukken for his leadership role in overseeing the development of this MOU on behalf of the CFTC.”

After signing the MOU, SEC Chairman Donaldson stated: “The coordination and information sharing envisioned by this MOU are important steps in ensuring effective oversight of this jointly regulated market. We look forward to working with the CFTC in fulfilling our respective responsibilities in this developing market.”

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.

For additional information or a copy of the Memorandum of Understanding, please contact the CFTC’s Office of the Secretariat, Three Lafayette Centre, 1155 21st Street, N.W., Washington, D.C. 20581, (202) 418-5100, or the Commission’s website,

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Media Contacts
Alan Sobba (202) 418-5080
R. David Gary (202) 418-5085
Office of External Affairs

Related Documents
Memorandum of Understanding