For Release:March 15, 1996


Authorities Also Welcome the Signing of a Complementary MOU Agreement by 49 International Foreign Futures Exchanges and Clearing Organizations from 18 Countries

Washington -- The U.S. Commodity Futures Trading Commission (CFTC) announced today that it has joined the following international futures regulators as one of the founding signatories of a Declaration on Cooperation and Supervision of International Futures Exchanges and Clearing Organizations(Declaration): the United Kingdom Securities and Investments Board (SIB); the Australian Securities Commission (ASC); the Austrian Ministry of Finance; the French Commission des Operations de Bourse (COB); Bundesaufsichtsamt Fur der Wertpapierhandel (BAWE) (Germany); the Securities and Futures Commission (SFC) (Hong Kong); the Central Bank of Ireland (CBI);

Commissione Nazionale per le Societa e la Borsa (CONSOB) (Italy); the Securities Board of Netherlands (STE); the Commission des Valeurs Mobilieres du Quebec (CVMQ); the Monetary Authority of Singapore (MAS); the Financial Services Board of South Africa (FSB); and the Comision Nacional del Mercado de Valores (CNMV) (Spain).

The authorities also welcomed the signing today of a complementary Memorandum of Understanding and Agreement (MOU) by 49 international futures exchanges and clearing organizations.

The Documents Constitute Multilateral Mechanisms for Bilateral Information Sharing

Both documents constitute multilateral mechanisms for the sharing of information on a bilateral basis between the requesting and requested market authority consistent with their legal and contractual obligations.

The Declaration and the MOU are at the core of developments contemplated in the recommendations and endorsements agreed at the meeting in Windsor, England convened in May 1995 by the CFTC and the SIB. The documents establish mechanisms whereby the occurrence of certain agreed triggering events affecting an exchange member's financial resources or positions will prompt the sharing of information under the Declaration and/or MOU. The trigger levels are designed to facilitate the identification of large exposures by firms that could have a potentially adverse effect on markets. The need for such enhanced information sharing was one of the lessons learned during the Barings crisis last year.

The documents underscore that in a global market environment the effective supervision of futures markets requires a partnership between markets and their regulators, both domestically and on a cross-border basis. The Declaration and MOU foster such a partnership by promoting the voluntary sharing of information on a market-to-market basis and demonstrating governmental support for such information sharing. The Declaration also facilitates the sharing of information in cases where local concerns or law may necessitate the involvement of a governmental authority.

The documents each establish a procedure to permit other exchanges, clearing organizations and their governmental authorities to join at a subsequent date.

Statements of the Co-Chair of the May 1995 Windsor Meeting

Statement of the Commodity Futures Trading Commission

CFTC Acting Chairman John E. Tull, Jr., in commenting on the agreements signed today, stated that:

"The Declaration and MOU represent an unprecedented exercise in cooperation between and among world futures exchanges, clearing organizations, and regulatory authorities.

The agreements, which are a product of close consultation by all of the parties, significantly enhance the international safety net for financial markets. In an era where exchange member firms typically trade on multiple exchanges, an individual regulator or market authority alone may not have the information necessary to evaluate the risks to its markets.

The Commission is particularly gratified that international regulators, exchanges and clearing organizations have given practical content to the initiatives started at Windsor, England last May on the sharing of large exposure information. Indeed, the exchanges and clearing organizations which are today signing the MOU, and the regulators signing the Declaration are demonstrating their desire for the implementation of real measures to enhance market supervision.

Along with the need for firms to establish and maintain effective internal controls, the mechanisms created today for the sharing of large exposure information add an important new protection which significantly advances international efforts to address systemic risk which may result from the failure of a major firm.

I hope that other exchanges, clearing organizations and their governmental authorities will embrace this partnership between markets and regulators."

Statement of the Securities and Investments Board (SIB)

Sir Andrew Large, the Chairman of the SIB, said that -

'I warmly welcome the initiative of the Exchanges in preparing and finalising the Memorandum of Understanding. This is an encouraging development following the important Windsor Declaration of 17 May 1995, and the parallel work of the Global Task Force established by the UK and US futures and options trade associations (the FOA and FIA).

I am also delighted to have signed the closely related Declaration between the supervisors of futures exchanges and clearing organisations. The work jointly spearheaded by the SIB and US Commodity Futures Trading Commission at Windsor last y ear has now resulted in further progress in international co- operation between exchange supervisors.

These are both responses to the lessons of the Barings case on the importance of cross-border communication between exchanges and between supervisors.

I hope that the Memorandum of Understanding and the parallel Declaration will herald a new era of international co-operation in relation to financial securities and derivatives markets.

The two documents being signed today are a significant milestone for the forthcoming Statement to the G7 Finance Ministers by the world's securities, futures and banking supervisors. That Statement, concerning international financial risk management and the part to be played in it by the supervisory authorities, is now nearing completion.

I am sorry not to be present in Boca Raton for the signing ceremony, but unfortunately have a prior unbreakable engagement in London.'