MEMORANDUM OF UNDERSfANDlNG 

BETWEEN 111E 

COMISION NACIONA!j BANCARIA Y DE VALORES OF 

TilE UNITED MEXICAN STATES 

AND THE 

UNITED STATES COMMODITY FUTURES TRADING COMMISSION 

ON CONSULTATION, TECHNICAL ASSISTANCE, 

AND MUTUAL ASSI~'TANCE FOR Tiffi EXCHANGE OF INFORMATION 

Washington, D.C. 

May 11, 1995 
MEMORANDUM OF UNDERSTANDrNG 

The Comisi6n Nacional Bancaria y de Valores of the United Mexican States and the 

Commodity Futures Trading Commission of the United States of America acknowledge 

the significance of independent futures markets for economic development and growth 

and the need to ensure the development and maintenance of open, fair, efficient and 

sound domestic futures markets in Mexico and the United States of America. The 

Authorities recognize that the development of effective domestic legal and regulatory 

structures is essential to market integrity and investor protection. Additionally, the 

Authorities believe that international cooperation and consultation can facilitate the 

development and effective operation of futures markets. Therefore, the Authorities 

desire to establish a mutually acceptable basis for cooperation and consultation. 

Based on the foregoing, the Comisi6n Nacional Bancaria y de Valores of the United 

Mexican States and the Commodity Futures Trading Commission of the United States of 

America have reached the following understanding with respect to consultations, 

technical assistance, and mutual assistance for the exchange of information. The 

following understanding does not impose any legally binding obligations on the .~ ~ 

Authorities or supersede domestic law. 
I 

2 

CLAUSE I: DEFINillONS 

For the purposes of this Memorandum of Understanding: 

(a) "Authority" means: 

(i) the Comisi6n Nacional Bancaria y de Valores of the United Mexican 

States, or 

(ii) the Commodity Futures Trading Commission of the United States of 

America. 

(b) "requested Authority'' means an Authority to whom a request under this 

Memorandum of Understanding is made. 

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

Memorandum of Understanding. 

(d) "laws or regulations" means the laws, regulations and regulatory policies 

applicable to matters in the jurisdictions of the Authorities. 

(e) "futures markets" means those futures and options markets that are subject to 

regulation, regulated or supervised by the Authorities. 

(f) "person" means natural person, unincorponited association, partnership, body 

corporate, government, political subdivision, agency or instrumentality of a 

;;<-

government, or any equivalent authority. 

In any case of dispute over the meaning of any term used in this Memorandum of 

Understanding, the Authorities will consult as provided in Clause III, Section 7. 
3 

ClAUSE II: CONSULTATIONS REGARDING MATTERS OF M\ITUAL INTEREST AND 

PROVISION OF TECHNICAL ASSISTANCE FOR MARKET DEVELOPMENT 

Section 1: GENERAL PRINCIPLES FOR CONSULTATIONS AND TECHNICAL 

ASSI~'TANCE 

1. The Authorities consider it essential to establish a framework to enhance 

cooperation about all matters relating to the operation of their futures 

markets and the protection of investors. To that end the Authorities wish 

to arrange for the provision of teclmical assistance on a continuing basis, 

to enhance communication and to further mutual understanding. 

2. This Clause sets forth a statement of the intent of the Authorities 

regarding such a framework for consultations and technical assistance. 

The Authorities intend to engage in a regular dialogue on both domestic 

and international aspects of futures regulation and enforcement, and un 

the development and operation of their futures markets. 

Section 2: CONSULTATION ON THE STABILITY, EFFICIENCY AND 

INTEGRITY OF THE MARKETS 

The Authorities intend to consult periodically about matters of mutual interest in 

order to enhance cooperation and the protection of investors by ensuring the 

., 

stability, efficiency, and integrity of futures markets of Mexico and the United 

States. The ptupose of such consultations is to assist in the development of 

mutually agreeable approaches for strengthening futures markets of Mexico and 

the United States, while avoiding, wherever possible, conflicts that may arise 

from the application of differing regulatory practices. 
Section 3: 

4 

PROVISION OF TECHNICAL ASSISTANCE FOR THE 

DEVELOPMENT OF F\)TURES MARKETS IN MEXICO 

1. The Commodity Futures Trading Commission intends to consult with and 

provide advice to the Comisi6n Nacional Bancaria y de Valores v.lith a 

view roward establishing and implementing an ongoing technical 

assistance program for the development, administration and operation of 

futures markets in Mexico. Such consultations will identify specific types 

of technical assistance that the Authorities believe are desirable and 

reasonable. The technical assistance may include the training of personnel 

as well as the provision of information and advice relating to the 

development of: 

(i) systems to promote the risk management, price discovery and 

hedging functions of markers; 

(ii) types of futures and options products to fill particular needs; 

(iii) order handling systems; 

(iv) trade recording and comparison systems; 

(v) quotation and transaction dafa transmission systems; 

(vi) clearance and settlement mechanisms; 

(vii) regulatory requirements relating to market 

professionals and capital adequacy; 

(viii) systems and related regulatory mechanisms 

relating to accounting and disclosure; 

(ix) systems necessary for effective futures market surveillance and 

enforcement programs; and 

(x) procedures and practices to protect investors. 

I 
I 

5 

2. The Authorities recognize that specific technical assistance will be subject 

to the availability of resources as well as domestic authorizing legislation. 

- Section 4: PROVISION OF TECHNICAL ASSISTANCE TO EMFRGING 

FUTURES MARKETS 

The Authorities share a common commitment to supporting the development of 

open, safe, sound and efficient futures markets around the world. The 

Authorities believe that combining their unique experiences and perspectives will 

provide a valuable resource for countries with emerging futures markets. 

Therefore, the Authorities intend to work together to respond to requests from 

countries with emerging futures markets for technical assistance on a wide 

variety of futures issues. 

CLAUSE ill: MUTUAL ASSISTANCE FOR THE EXCHANGE OF INFORMATION 

Section 1: SCOPE OF ASSISTANCE 

L In accordance with the domestic laws and regulations of their respective 

States, the Authorities will provide the fullest measure of mutual 

assistance, as contemplated by this Clause. Such assistance will be _, 

provided to facilitate the futures market oversight functions; the 

enforcement of the laws and regulations applicable to futures markets; 

and the conduct of investigations, litigation or prosecution in cases where 

information located within the jurisdiction of the requested Authority 

would be useful in determining whether, or proving that, the laws or 
6 

regulations of the requesting Authority may have been violated. 

Assistance will not be provided where the execution of a request would 

require the requested Authority to exceed its legal authority or w9uld 

otherwise be prohibited by the laws of the State of the requested 

Authority. 

2. Assistance available pursuant to this Clause includes, but is not limited to: 

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

Authority; 

(b) obtaining the statements of persons; and 

(c) obtaining information and documents from persons. 

3. The Authorities recognize that they may not in all circumstances possess 

the legal Authority to pruville the assistance contemplated in this Clause. 

Subject to such limitations of legal authority, the Authorities will use all 

reasonable efforts to obtain the authorization, or the assistance of such 

other governmental agencies that have such authority, necessary to 

provide the assistance described in this Clause. 

Section 2: . GENERAL PRINCIPLES FOR PROVIDING ASSISTANCE 

1. This Clause sets forth a statement of intent of the Authorities to establish 

a framework to facilitate the exchange of information between the 

Authorities to the fullest extent possible in accordance with the laws of 

their respective jurisdictions. 
I 

7 

2. The provisions of this Clause will not give rise to a right, directly or 

indirectly, on the part of any person, other than the Authorities, to obtain, 

suppress or exclude any information or to challenge the execution of a 

request for assistance under this Clause. 

3. A request for assistance may be denied by the requested Authority: 

(a) where the request would require the requested Authority to act in a 

manner which would violate the laws of the State of the requested 

Authority; 

(b) where the request is not in accordance with the provisions set forth 

in this Clause; 

(c) on grounds of essential public interest; or 

(d) on grounds of national security. 

Section 3: 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. Requests shall specify: 

(a) a general description of both the matter that is the subject of the 

request and the purpose for which the assistance or information is 

sought; 

(b) a general description of the assistance, documents, information and 

statements of persons sought by the requesting Authority; 
I 

8 

(c) the persons believed by the requesting Authority to possess the 

information sought, or the places where such information may be 

obtained, if the requesting Authority is knowledgeable thereof; 

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

the request; and 

(e) the desired time period for the reply. 

3. In the event of urgency, requests for assistance and replies to such 

' 

requests may be effected by summary procedures or by means of 

communication other than the exchange of letters, provided that all such 

conununications are confirmed in the manner prescribed in the foregoing 

paragraphs of this Section. 

Section 4: EXECU110N OF REQUESTS 

1. Information held in the files of the requested Authority will be provided 

upon request of the requesting Authority pursuant to Section 3 of this 

Clause. 

2. In making a request for assistance, the requesting Authority may designate 

the persons whose statements it wishes the requested Authority to obtain. 
I 

9 

3. When requested by the requesting Authority, the requested Authority will 

use its best efforts to obtain statements from persons involved, directly or 

indirectly, in the activities that are the subject of the request or balding 

information that may assist in carrying out the request. The requested 

Authority also will require the production of other evidence from any 

other person or persons designated by the requesting Authority. 

4. The obtaining of statements, the gathering of documents, and the 

response to a request under this Memorandum of Understanding will be 

conducted in accordance with the procedures of the requested Authority 

and by persons designated by the requested Authority, unless othenvise 

agreed by the Authorities. 

5. Notwithstanding any other provision of this Memorandum of 

Understanding, any person providing statements, information or 

documents as a result of a request made under this Memorandum of 

Understanding will be entitled to all the rights and privileges of the laws 

of the State of the requested Authority that may otherwise be applicable. 

Assertions regarding other rights and privileges arising exclusively .. pursuant to the law of the State of the requesting Authority shall be 

preserved for consideration by the courts in the State of the requesting 

Authority. 
I 

10 

Section 5: PERMISSIBLE USES OF INFORMATION 

1. The requesting Authority may use the information furnished by the 

requested Authority solely: 

(a) for the purposes stated in the request vvith respect to ensuring 

compliance with or enforcement of the laws and regulations of the 

requesting Authority, including the legal provisions specified in the 

request and related provisions; and 

' (b) for purposes within the general framework of the use stated in the 

request, including conducting a civil or administrative enforcement 

proceeding, assisting in a self-regulatory enforcement proceeding, 

assisting in a criminal prosecution, or conducting any investigation 

related thereto for any general charge applicable to the violation of 

the provisions specified in the request. 

2. The requesting Authority will not use the information furnished for any 

purpose other than those stated in paragraph 1 of this Section, unless it 

has first informed the requested Authority of its intention and the 

requested Authority has not objected, within 14 days, to such intended . 

use of the information. If the requested Authority opposes such use, the 

information may be used only under the conditions imposed by the 

requested Authority. If use of the information is opposed by the requested 
11 

Authority, the Authorities agree to consult pursuant to Section 7 of this 

Clause concerning the reasons for the refusal and the circumstances under 

which use of the information might othervvise be allowed. 

Section 6: CONF!DEN11ALI1Y OF REQUESfS 

]_ To the extent permitted by law, except for disclosures in accordance with 

Section 5 of this Clause and disclosures that are absolutely necessary to 

carry out the request: 

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

Clause, the contents of such requests, and any other matters arising 

during the operation of this Clause, including consultations 

between the Authorities and unsolicited a~sistance; and 

(b) the requesting Authority will keep confidential any information 

received by the requested Authority pursuant to this Clause. 

Such confidentiality may be waived by the mutual agreement of the Authorities. 

2. Except as contemplated by Section 5 of this Clause, 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. Where appropriate, to 

further ensure the confidentiality of any information provided by a 

requested Authority in response to a request under this Clause, the 

requested Authority will in good faith deternrine and represent that public 

disclosure of the information would violate its country's laws. Unless 

I 
I 

12 

otherwise agreed, if such information is obtained by any other person, the 

requesting Authority will use its best efforts to ensure that such 

information will not be used by that person in any way that involves 

disclosure to any other person. 

3. The requesting Authority will notify the requested Authority of any 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. When the requesting Authority has terminated the matter for which 

assistance has been requested under this Clause, upon request of the 

requested Authority, it will return to the requested Authority, to the 

extent pennitted. by law, all documents and copies thereof not already 

disclosed in proceedings referred to in Section 5 of this Clause and other 

material disclosing the contents of such documents, other than material 

that is generated as part of the deliberative or internal analytical process 

of the requesting Authority. 

5. Any document or any other material provided by the requested Authority 

·.<. 

in response to a request undei this Clause and any other material 

disclosing its content, other than material that is generated as part of the 

deliberative or internal analytical process of the requesting Authority, v..rill 

not become the property of the requesting Authority, and must be 

redelivered, upon demand, to the requested Authority without delay to the 
13 

extent permitted by the law of the requesting Authority; provided that 

such demand may be made only if the requested Authority has reason to 

believe that the information has been or is likely to be disclosed or used 

other than as contemplated by Section 5 of this Clause. 

Section 7: CONSULTATION REGARDING MUTUAL ASSISTANCE PURSUANT 

TO THIS CLAUSE 

1. The Authorities will engage in consultation with respect to this Clause 

with a view to improving its operation and resolving any matters that may 

anse. In particular, the Authorities will con.•mlt upon request in the event 

of: 

(a) a refusal by one Authority to comply with a request for information 

on the grounds set forth in paragraphs 3(a) and (b) of Section 2 of 

this Clause; or 

(b) a change in market or business conditions, or in domestic 

legislation, or any other circumstance that makes it necessary or 

appropriate to amend or exteri.d this Clause in order to achieve its 

purposes. 

2. The Authorities may agree on such practical measures as may be necessary 

to facilitate the implementation of this Clause. 
Section 8: 

14 

COSTS OF INVESTIGKI10N 

If it appears that responding to a request for assistance under tl-lls Clause will 

involve substantial costs being incurred by the requested Authority, the requested 

Authority and the requesting Authority will establish a cost -sharing arrangement 

before continuing to respond to such request for assistance. 

Section 9: AMENDMENTS AND WAIVERS 

' Any provision established in this Memorandum of Understanding may be 

amended or waived by mutual agreement of the parties, fmmalized by vvritten 

communications in which the effective date of the amendment or the application 

of the waiver is specified. 

ClAUSE N: FINAL PROVISIONS 

Section 1: EXEClmON 

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

execution. 

.. '· 
.• 

15 

Section 2: TERMINATION 

This Memorandum of Understanding may be terminated by either Authority by 

that Authority giving 30 days notice to the other Authority that this 

Memorandum of Understanding is no longer in effect. If either Authority gives 

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

with respect to all requests for assistance that are made before the effective date 

of notification until the requesting Authority terminates the matter for which 

assistance was requested . 

I 
COMISION NACIONAL BANCARIA Y DE 

VALORES OE THE, UNrTED MEXICAN 

STATES 

I 

by / 

DATED this ll th day of May, 1995 

16 

UNITED STATES COMMODITY 

FUTURES TRADING COMMISSION 

by ~~ Mary L. Schapiro 

Chairman 

I