,Release: #4072-97

For Release: October 31, 1997


Regulatory authorities and representatives from 15 jurisdictions responsible for the supervision of many of the world's leading commodity futures markets have today issued a Communiqu� at a meeting in Tokyo jointly chaired by the United States Commodity Futures Trading Commission (CFTC), the Japanese Ministry of International Trade and Industry (MITI) in conjunction with the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF), and the United Kingdom Financial Services Authority (FSA).

The conference participants endorsed two guidance papers on best practices in contract design and review, and in approaches to market surveillance and information sharing. They agreed to commend these papers to the relevant organizations in their home jurisdictions. The papers set out a clear framework for regulatory cooperation, and for the oversight of contract development and market activity. They represent the first occasion on which the authorities responsible for overseeing the commodity derivatives markets have agreed to international benchmarks for the supervision of these markets, and demonstrate the importance attached by the authorities to the maintenance of market integrity and confidence.

The guidance establishes regulatory expectations with regard to the transparency of trading practices. It recommends that market authorities should be able to access sufficient information about on-exchange and related cash and over-the-counter positions both to identify dangerous concentrations of positions, and to evaluate the functioning of the market. The regulatory authorities agreed to cooperate in particular in sharing surveillance information about large exposures. They also agreed to take active steps where possible with their own governments to seek the removal of domestic legal or other obstacles to obtaining and sharing such information.

During the conference the authorities agreed on proposals to amend the Boca Raton Declaration on information sharing between futures markets regulators in response to specific market events. The scope for participation in the Declaration was increased. The authorities also established emergency contact lists and agreed to keep these up-to-date. They identified further areas of work, including in the area of market manipulation, which they would refer to IOSCO for its consideration. They also invited other authorities to support the Communiqu�.

MITI and MAFF also announced that they have become signatories to the Boca Raton Declaration today.

Mr. Kouji Honda, Director General of the Food and Marketing Bureau, MAFF, welcoming the delegations from participating jurisdictions, said: "the successful conclusion of the group's work over the last year marks a milestone in confirming the importance of market surveillance with the context of the reform of commodity futures markets, and also in ensuring their stable relationship with physical markets."

Mr. Mitsuyasu Iwata, Director-General for Commerce and Distribution Policy. MITI, welcoming the conclusion of the meeting, said: "with the success of this work we shall be able to address market manipulation and maintain market integrity very well. Our international cooperation, including the sharing of information between authorities, will create a strong foundation for the development of commodity futures markets in each jurisdiction."

CFTC Chairperson Brooksley Born, welcoming the Communiqu�, said: "Our efforts in the last year have brought together our combined knowledge concerning the special supervisory needs of commodity markets. I am pleased that we were able to reach a consensus on concrete standards of best practices that set international benchmarks to assist regulators and markets to meet these needs." She also added, "I am delighted to welcome MITI and MAFF as signatories to the Boca Raton Declaration."

FSA Chairman Mr. Howard Davies, welcoming the publication of the guidance papers, said: "I am delighted to be here to play a full part in achieving the goals we set ourselves in the programme of work we launched a year ago. What we have accomplished is unique, and of great significance for the maintenance of integrity and confidence in the commodity futures markets. I am particularly please to represent the newly created Financial Services Authority of the United Kingdom in the successful completion of its first major global public function."