MEMORANDUM OF UNDERSTANDING 

BETWEEN THE UNITED STATES COMMODITY 

FUTURES TRADING COMMISSION AND THE 

AUSTRALIAN SECURITIES COMMISSION 

CONCERNING CONSULTATION AND 

COOPERATION IN THE 

ADMINISTRATION AND ENFORCEMENT OF FUTURES LAWS 

OCTOBER 19, 1994 
The United States Commodity Futures Trading Commission and the Australian 

Securities Commission, recognizing the increasing international activity in the futures 

markets and the corresponding need for mutual cooperation as a means for improving 

their effectiveness in administering and enforcing the futures laws of their respective 

countries, have reached the following understanding: 

Clause 1: Definitions 

1. For the purposes of this Memorandum of Understanding: 

(a) "Authority" means: 

(i) the Commodity Futures Trading Commission -.:::f the United States; 

or 

(ii) the Australian Securities Commission. 

The United States Commodity Futures Trading Commission (CFTC) was 

established pursuant to the Commodity Futures Trading Commission Act of 1974. The 

CFTC is the U.S. national regulator responsible for implementing, administering and 

enforcing the Commodity Exchange Act. 

-

The Australian Securities Commission (ASC) is the national corporate and 

securities regulator established under the Australian Securities Commission Act 1989. The 

ASC is responsible for administering and enforcing the Corporations Law and the 

Australian Securities Commission Act 1989 which provide for the regulation of 

corporations and the securities and futures industries. The ASC's ability to exercise 

CFTC/AUSTRALIAN MOU 

PAGE 2 
coercive powers on behalf of foreign regulators is governed by the Mutual Assistance in 

Business Regulation Act 1992. 

(b) "requested Authority" means an Authority to whom a request IS made 

under this Memorandum of Understanding. 

(c) "requesting Authority" means an Authority making a request under this 

Memorandum of Understanding. 

(d) "person" includes a natural person, unincorporated association, partnership, 

or body corporate, government or political subdivision, agency, or 

instrumentality of a government. 

(e) "futures business" means any business which i~·.'olves, in whole or in part, 

effecting transactions in futures and options for the accounts of others; 

buying and selling futures and options for one's own account; advising 

others for compensation, either directly or through publications, as to the 

desirability of investing in, purchasing or selling futures and options, the 

management, promotion, offer or sale of any collective investment scheme; 

or equivalent activities conducted by persons or entities; and includes 

commodity trading advisors, commodity pool operators, futures conl.mission 

merchants, introducing brokers, associated persons and floor brokers, floor 

traders, and futures and options brokers and dealers. 

(f) "futures processing business" means a-clearing corporation. 

(g) "futures market" means an exchange or other market for futures and 

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PAGE 3 
options that is recognized, supervised or subject to regulation by the 

Authorities; and 

(h) "laws or regulations" means: 

(i) the provisions of the laws, or regulations promulgated thereunder, 

of the United States and; 

(ii) the provisions of the laws, or regulations promulgated thereunder, 

of Australia, including those laws, and regulations or other delegated 

legislation, promulgated thereunder, of any Australian State or 

Territory, which are from time to time administered by the 

Australian Securities Commission; 

concernmg: 

(a) insider trading, misrepresentation or the use of fraudulent, 

deceptive or manipulative practices in connection with the 

offer, purchase or sale of any futures or options contract or 

the conduct of futures business; 

(b) the duties of persons to comply with periodic reporting 

requirements; 

(c) the making of a false or misleading statement or any material 

omission in any application or report made to the Authorities; 

(d) the duties of persons or futures businesses to make full and 

fair disclosure of information to investors; 

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(e) the duties of futures businesses and futures processing 

businesses pertaining to their financial, operational or other 

requirements and their duties of fair dealing in the offer and 

-

sale of futures and options, the execution of transactions and 

the conduct of their businesses; 

(f) the financial and other qualifications of those engaged in, or 

in control of, futures businesses, futures processing businesses 

or futures nrrkets. 

2. The Authorities will consult, pursuant to Clause 9, in the event of a dispute over 

the meaning of any term used in this Memorandum of I Tnderstanding. 

Clause 2: Establishment of a Framework for Consultations 

Regarding Matters of Mutual Interest 

The Authorities intend to engage in consultations about matters of mutual interest 

designed to further enhance cooperation and to protect investors by ensuring the stability, 

efficiency, and integrity of the futures markets of the United States and Australia. Such 

consultations will also enhance the exercise of market oversight functions and the 

administration of United States and Australian futures laws. 

The purpose of such consultations is to assist in the development of mutually 

acceptable approaches for strengthening the futures markets of the United States and 

Australia, while avoiding, whenever possible, conflicts that may arise from the application 

of differing regulatory practices. 

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Clause 3: General Principles 

1. This Memorandum of Understanding sets forth a statement of intent of the 

Authorities to establish a framework for mutual assistance and to facilitate the exchange 

of information between the Authorities to enforce or secure compliance with any law or 

regulation, as that term is defined herein, and does not impose any legally binding 

obligation on the Authorities or supersede domestic law. This Memorandum of 

Understanding does not create any enforceable rights, and does not modify or supersede 

any laws or regulations in force in, or applying to, the United St2.!:es or Australia. 

2. The entry into effect of this Memorandum of Understanding does not affect 

any right of either Authority arising under the law of its State or any other ar:angement 

to take measures otherwise than as provided herein to obtain information necessary to 

ensure compliance with, or to enforce, the laws or regulations of its State. In particular, 

this Memorandum of Understanding does not affect any right of either Authority to 

communicate with, or obtain information or documents from, any person, on a voluntary 

basis, in the State of the other Authority. 

3. Where one Authority wishes to make enquiries of, or seek information from, 

a person within the territory of the other Authority on a voluntary basis, the enquiries 

will be conducted in accordance with arrangements agreed between the Authorities. 

4. This Memorandum of Understanding is intended solely for mutual legal 

assistance between the Authorities. No provision of this Memorandum of Understanding 

shall be construed as conferring the right to ask for, or challenge, the execution of a 

request for assistance upon any person other than the Authorities defined herein. 

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5. The Authorities recognize the need for and the desirability of providing 

mutual assistance and exchanging information to assist each other in securing compliance 

with the laws or regulations of their respective States. The requested Authority may, 

however, deny assistance requested under this Memorandum of Understanding on the 

ground that: 

(a) prov1ston of the assistance would be contrary to the national or public 

interest or the law of the State of the requested Authority; or 

(b) the request is not in accordance with the provisions of this Memorandum 

of Understanding. 

Clause 4: Scope of Assistance 

I. The Authorities will provide the fullest mutual assistance, within the 

framework of this Memorandum of Understanding. Such assistance will be provided to 

facilitate the administration and enforcement of the laws or regulations applicable to 

futures. Such assistance may be provided notwithstanding that the type of conduct 

described in the request for assistance would not constitute a violation of the laws or 

regulations of the State of the requested Authority. 

2. Assistance available under this Memorandum of Understanding may include: 

(a) providing access to information in the files of the requested Authority; 

(b) taking the testimony and statements of persons; 

(c) obtaining information and documents from persons; and 

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(d) conducting compliance inspections or examinations of futures businesses, 

futures processing businesses and futures markets. 

Clause 5: Requests for Assistance 

1. Requests for assistance will be made in writing and addressed to the 

requested Authority's contact officer listed in Appendix A. 

2. A request for assistance will specify the following: 

(a) a general description of both the subject matter of the request and the 

purpose for which the information and/ or testimony is sought; 

(b) a general description of the assistance, information, documents or. <.:estimony 

of persons sought by the requesting Authority; 

(c) information in the possession of the requesting Authority that might assist 

the requested Authority in identifying the persons or entities believed by 

the requesting Authority to possess the information sought, or the places 

where such information may be obtained; 

(d) the legal provisions pertaining to the matter that ts the subject of the 

request; 

(e) the desired time period for the reply; and 

(f) information in the possession of the requesting Authority that supports an 

inference that the subject matter of the request concerns a breach of the law 

administered by the requesting Authority. 

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3. In urgent circumstances, a request for assistance and a reply to such a 

request may be effected by sununary procedures or by means of communication other 

than the exchange of letters, provided that they are confirmed in the manner prescribed 

in this Clause. 

Clause 6: Execution of Requests 

1. Access to information held in the files of the requested Authority will be 

provided upon the request of the requesting Authority. 

2. The requested Authority will, in response to a request, take the testimony 

of persons involved, directly or indirectly, in the activities underlyi!""'g: the request, or 

holding information that may assist in carrying out the request. The requesting 

Authority may, in its discretion, request the taking of the testimony or statements of 

specific persons. The requested Authority also may require the production of other 

evidence from any other person or persons designated by the requesting Authority. 

3. The testimony of persons will be taken in accordance with the laws and 

practices of the State of the requested Authority. Any person providing information or 

evidence as a result of a request made under this Memorandum of Understandin-g will be 

entitled to all of the rights and protections of the laws of the State of the requested 

Authority. Where assertions are made regarding other rights and privileges arising 

' exclusively pursuant to the laws of the State of the requesting Authority, the Authorities 

will consult to determine the appropriate way to proceed. 

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4. When requested by the requesting Authority, testimony or statements will 

be taken under oath or affirmation and a transcript will be made. In addition, a 

representative of the requesting Authority may be present at the taking of testimony or 

statements and may prescribe specific questions to be asked of any witness. 

5. When requested by the requesting Authority, an inspection or examination 

will be conducted of the books and records of a futures business or its custodian or agent, 

a futures processing business or a futures market. In addition, a representative of the 

requesting Authority may be present at the inspection or examination and, subject to 

approval by the requested Authority, may participate in conducting that inspection or 

examination. 

6. In addition to assisting in the taking of testimony or statements pursuant 

to paragraph 4, or an inspection or examination pursuant to paragraph 5 of this Clause, 

the requesting Authority may submit to the requested Authority a request, with reasons, 

that a person or persons designated by the requesting Authority be permitted to conduct 

the testimony or take a statement of any person, or conduct an inspection or examination. 

(a) The request may be granted, modified or denied by the requested Authority 

in its discretion. The requested Authority may impose such conditions on 

the participation of the requesting Authority as it deems appropriate. 

(b) Where a request specifics that the laws of the State of the requesting 

Authority require the opportunity for counsel for the witness or any party 

to the proceeding, to pose questions to the witness, the requested Authority 

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PAGE 10 
will use its best efforts to ensure that such an opportunity will be given. 

(c) Clause 9 applies to the denial of a request referred to in this Clause. 

Clause 7: Permissible Use of Information 

I. The requesting Authority may use the information furnished pursuant to 

this Memorandum of Understanding solely: 

(a) for the purposes stated in the request, including ensuring compliance with 

or enfcc~ement of the laws or regulations of the requesting Authority 

specified in the request, and related provisions; and 

(b) for related purposes, including conducting a civil or aC::-1inistrative 

enforcement proceeding, assisting in a self-regulatory enforcement 

proceeding, conducting or assisting in a criminal prosecution, or conducting 

any investigation related thereto for any general charge applicable to the 

violation of the provision specified in the request. 

2. To use the information furnished for any purpose other than those stated 

in paragraph 1 of this Clause, the requesting Authority will first inform the requested 

Authority of its intention and provide the requested Authority the opportunity to oppose 

such use. The requested Authority will raise its objections to such use, if any, within 14 

days of receipt of the requesting Authority's notice. If the requested Authority opposes 

such use of the information the Authorities agree to consult pursuant to Clause 9 

concerning the reasons for the objections. 

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Clause 8: Confidentiality of Requests 

I. To the extent permitted by law, except for disclosures in accordance with 

Clause 7, or those necessary for the furtherance of the request: 

(a) each Authority will keep confidential requests made under this 

Memorandum of Understanding, the contents of such requests, and any 

other matters arising during the operation of this Memorandum of 

Understanding, including consultations between the Authorities and 

unsolicited assistance; and 

(b) the requesting Authority will keep confidential any information received 

pursuant to this Memorandum of Understanding. 

2. Except as contemplated by Clause 7, the requesting Authority will not offer 

the information to, and will use its best efforts to ensure that it is not obtained by, any 

other person. Unless otherwise agreed, in the event that any other person obtains such 

information the requesting Authority will use its best efforts to ensure that such 

information is not used by that person in any way that involves disclosure to any other 

person. 

3. The requesting Authority will notify the requested Authority of ally legally 

enforceable demand for information prior to complying with the demand and will assert 

such appropriate legal exemptions or privileges with respect to such information as may 

be available. 

4. In response to a request by the requested Authority and to the extent 

permitted by law, as soon as the requesting Authority has terminated the matter for 

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PAGE 12 
which assistance has been requested under this Memorandum of Understanding, it will 

return to the requested Authority all documents and copies thereof not already disclosed 

in proceedings referred to in Clause 7 and other material disclosing the contents of such 

documents, other than material generated as part of the deliberative or internal analytical 

processes of the requesting Authority, which may be retained. 

Clause 9: 

I. 

Consultations Regarding Mutual Assistance Pursuant to this Memorandum 

of Understanding 

The Authorities will keep the operation of this Memorandum of 

Understanding under continuous review and will consult with a view to improving its 

operation and resolving any matters which may arise. In particular, the Authorities will 

consult upon request in the event of: 

(a) a denial by one Authority of, or opposition by one Authority to, a request 

or proposal made by the other Authority pursuant to this Memorandum of 

Understanding; or 

(b) a change in market or business conditions, or in the laws and regulations of 

the State of either Authority, or any other development which makes it 

necessary to amend or extend this Memorandum of Understanding in order 

to achieve its purposes. 

2. In cases where the requested Authority is the CFTC, denial of a request 

under Clause 3{5)(a) will be made by its Commission after consultation with relevant 

officials within the United States Government, and in cases where the requested 

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Authority is the ASC, such a denial will be made by its Commission, or by the Australian 

Attorney-General, or his or her delegate ("Attorney-General"), in consultation with the 

AS C. If the Attorney-General denies assistance, the ASC will forward to the CFTC the 

reasons given by the Attorney-General (if any) for such denial. 

3. The Authorities may determine such practical measures as may be necessary 

to facilitate the implementation of this Memorandum of Understanding. 

4. Any of the terms of this Memorandum of Understanding may be amended, 

relaxed or waived by mutual consent. 

Clause 10; Unsolicited Assistance 

To the extent permitted by law, each Authority will use reasonable efforts to 

provide the other Authority with any information it discovers that gives rise to a 

suspicion of a breach, or anticipated breach, of the laws or regulations of the other 

Authority. 

Clause 11: Costs of Investigation 

If it appears to the requested Authority that it will incur substantial--costs in 

responding to a request for assistance under this Memorandum of Understanding, the 

requested Authority and the requesting Authority will establish a cost sharing 

arrangement before continuing to respond to such request for assistance. 

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Cl.ause 12: Effective Date 

This Memorandum of Understanding will be effective from the date of its signature 

by the Authorities. 

Clause 13: Termination 

This Memorandum of Understanding will continue in effect until the expiration 

of 30 days after either Authority gives written notice to the other Authority of its 

intention to terminate the Memorandum of Understanding. If either Authority gives 

such notice, this Memorandum of Understanding will continue to have effect with respect 

to all requests for assistance that were made before the effective date of notification 'tntil 

the requesting Authority terminates the matter for which assistance was requested. 

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• 

SIGNED this _ __,_\ "\_,__"" __ day of __,UZlci,_--"v"'lo'-'ixn"'-' ___ 1994. 

FOR THE: 

UNITED STATES COMMODITY 

FUTURES TRADING COMMISSION 

fn~dk~ MARY L. SCHAPIRO 

CHAIRMAN 

AUSTRALIAN SECURITIES 

COMMISSION 

ALAN CAMERON 

CHAIRMAN 

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