11EMQRANDll-! OF lNDERSTANDit¥; ~ Ex:CHAN:;E: OF INFOR"tATION BE'1WEEN 'ffiE LtHTED 

STATES SIDJR!TrES AND EXOl.ANG£ CCM1ISSIOO AND 'IliE ltfiTED K~ DEPAR'IMENT 

OF 'IRADE AND INDUSTRY DJ MA'ITERS RELATIN:; TO SEX:'URlTIES AND I£l.WEEN '!HE 

lNITED STATES o::M>iCOI'N F\.JI'URES TRAD.m:; rof11SSIOO AND THE illlTED RI::NQo1 

DEPA.RIMENI' OF 'rFAOE AND INDUS'ffiY IN MA'IT£RS RELATIN:'i 'IQ FUI\JRES 

The United States Securities ard Exchange COlTllission, COID'Odity Futures 

Trading Cam~ission, anO the United Kingjan Dep3.rtment of Trade and Ir:dustry, 

recognizing t.be increasing international activity in the secu.fities, futures 

and investments rrarkets and the corresponding need for mutual OXJperation 

between the relevant national authorities, have reached the following 

understanding: 

1 For purposes of this Me:norandU'n, 

(ai "Authorities" means 

( i) the (:qlarbnent of Trade and Irrlustry ( "m'r}; 

(ii) the Securities and Exchange CQ"ITTlissico ("S.S:::::") and the 

Conrodity Futures Trading Ccmnission ( "CF'IC") acting with respect 

to their respective areas of jurisdictioo (each bei.n-3 an 

"Authority" in respect thereof). 

{b) "Invesbnent Businesses" means invesiJnent businesses, investment 

canpanies, other collective investment undertakings and their 

EqUivalents, investment banks, merchant banks, brokers, dealers, 

jobbers, investment advisers and investor advisory services. 

(C) "Securities Processing Businesses" means clearing 

corp:.ra tions or securities transfer agents. 

(d) "Futures Businesses" means C"(]'tlT'o('dity trading advisors, carmodity 

I=CQl operators, futures ccmnission crerchants, introducing brokers, 

associated persons an:::i floor brokers, clearing corp::>rations, futures arrl 

options brokers and dealers. 

(e) "person• ~ a natural. person, mincorp::>rated. Association., or 

bcx:'ly corp:>rate, government, or political sul::divisicn, agency, or 

instrumentality of a government. -

<fl "rB.:iuested Authority" rreans an Authority to whan a request under 

this Manorandl..ITI is addresserl. 

Cgl "requesting Authority" rreans an Authority treking a request ooder 

this Mernorandun. 

<h> "legal rule or requiranent" rreans: 

(i) for securities, the statut$, ru.les, anCl nquiranents of the 

Unite::'! States and the lhited King:jan: 

(~) relating tc? ~ prevention of insider dealing in, 

m1srepresentat1on w the course of dealing in, and market 

rMnip.J.lation in, securities listed on an investment exchange or 
a nattorul sec-urtttes e.xchang<:o, or qLDted in an a:..~~m.a:.ru 

Inter-dealer quowum systan, or traded over-t.he-count 

"- ~. whcre the ex:C•_=nge, systen, or over-the-counter ma.rket is 

sttuatc:l. Wlthtn, ard a material part of any of the rele-..· • . . . _ an~ 

transactions 1n securtttes are effected within, the terrtto 

of the requesttng Authority; ry 

(8) directed a~ the conduct of Cll Investment or so::urities 

PrOC'esswg BUSinesses lccated within the territory of the 

r~estlng Authority; or (2) Investment or Securities 

Processing Businesses located outside the territory of the 

r€'CJuest.ing Authority which conduct an Investment Of" Securities 

Processing Business within such territory; or 

(C J relating to the financial and other qualifications of those 

engagEd in or in c:x:mqo~ of Inv~tment or Securities Proc-essing 

Businesses operat1.ng 1n the terrttory of the requesting 

Aut.hori ty. 

( ii) for futures, the statutes, rules, and requirements of 

the UniteCl. States ard the United King&m: 

(Al relating to the prevention of misrepresentation or rrerket 

manip.1lation with respect to any futures or options contract 

that is made, to be made, or that is to be traded or effectOO 

on an exchange, market, or board of trade, where such exchange, 

market or b::Ja..rd of trade is si tua.tOO within the territory of 

the re:ruesting Authority; 

(B} dirRCted at the conduct of (1) Futures BJsinesses located 

within the territory of the rEqUesting Authority; or (2) 

Futures B.Jsinesses located outside the territory of the 

requesting Authority that conduct a Futures Business within 

su::h territory; or 

(CJ relating to the financial and other qualifications of those 

engaged in or in control of Futures Businesses operating in the 

territory of the requesting Authority. 

Part I: General Principles 

2 'Ibis Menorandwt sets forth the basis U[XIO ...nict~ the SEX: and the OI'I and 

the Cl"''C arrl the orr reciprocally propose to exchange infonnatioo. for the 

puq:ose of facilitating the performance of their respective functions 

regarding the legal rules or requiranents of the UnitEd States arrl the UnitEd 

Kingdon. 

3 This Manorandlml sets forth a statanent of intent of the Authorities 

regarding the exchange of inforrratioo between the Aut..horities. Accordingly, 

the provisions of this Meoorand~.n~ shall oot give rise to the right on the 

part of any private party, directly or in:::lirectly, to obtain, suppress or 

excltrle any evidence or to dlallenge the ex:ecution of a request for 

assistarice ~.IDder this Marorandum. 

/4 In res[X)flSe to requests ...nich s:ttisfy the terms of Part II of this 

\ Manorandun arrl subject to the conditions set out in Part III, each Authority 

'.-: 
sha l_l_ as~_1 s~ _t!Je oths;cr_ by pro~~ing to ___ ~ tti~ y inf_orma tion ~ ~- !s _':'_i_ther .,. 

-aT read):' 1n --~ ts_ ~nd_s _o.r:__t.har._g __ <::.an_):ll:'_:.:__~! --~_s!__ eff~t.s obtain 1n__or~ 

~eryab1e __ t.l]~ qth~r ~o s_ecur:- ~liance with e re1e~a~!eg_~~es a::~ 

r~uanents.-, The AuU)OrltlCS'shall BCCOrdmgly-provide eacFi oUier 

-ass1stance in obta1ning information which is available within their territory 

for the purp::.se of securing cxmpliance with sudl legal rule:; aOO 

requiranents. 

5 The Authorities recognize the need and desirability of exchanging 

infonnation to assist each other in securing canpliance with their respective 

legal rules and requiranents. Ho-;ever, assistance may b? denied on grounds 

of public interest determined in cases where the nquesterl Authority is the 

DTI by the Secretary of State and where the requested Authority is either the 

sa::: or CF1C l::rj its respective Connissico, after consul tatioo with relevant 

officials within the u.s. Government. 

6 This Menorandum does not extend to infonnation held by the DI'I solely by 

virtue of po..'ers ard fW1ctions that relate tD matters other than securities, 

investments, futures, or canp.:::>.ny law. 

Part II: Requests for Infonmation 

7 Any request for infonnation made under this MEIDOrandum shall sa.tisfy the 

following requirenents: 

(a)' wherever PJSsible it shall be in writing bJt in cases of 

urgency it may t:e oral, but confirmed in writing within 10 days; 

(b) it shall clearly specify the following: 

( i) the infonration rEqUested; 

( ii l the general purPJse for which the inforrnatia1 is sought, 

indicating in p:trticular the legal rule or rEqUirenent pertaining to 

the matter which is the subject of the rfGUest; 

(iii) the grounds on which breach of the legal rule or requirenent 

is suspected. HOool'ever, where the legal rule or n:quiranent in 

question is that a person should be of good repute and o::mpetent 

<"fit and proper" or not "statutorily disqualifiel"l if he is to set 

up or carry on an Investment, Securities Processing, or Futures 

Business, it is sufficient canpliance with this s~ragraph to 

specify that information is sought for that purpose; 

(iv) the identity of the persoo whose conduct causes concern. 

Hcwever, where the relevant legal rule or requirement falls within 

paragraph l(h)(i)(A) or lCh)(iiJ(A) above it is sufficient 

canpliance with this subparagraph to specify that information is 

sought concerning the grounds specifiOO in order to identify the 

person(s) against whan procee:lings or action is to be, or may be, 

taken; an:1 

(vl where it is apparent to the re;:ruesting Authority that another 

persoo may obtain the infonnatioo for a purpose other than securing 

canpliance with or enforcing the legal rule or requiremertt specified 

under sutparagraph (ii) above in respect of the persm(s) (if any) 

specifieJ. under subparagraph {iv) aOOve, to the extent permitted by 
Lh0 

and 

1 a.··· 

his o~ UK' r,-.,.]uest_lng Authority, t.he particulars of Uut p•: .>.v;--, 

interest; 

(c) 1t should be' ad.:l.ressed. to one of ~e requested. Authority's Galt..aofficers liste:l 1n Annex I, or his nan1nee pursuant to ...,.ri.tten not ~ -~ 

t.he requesting Authority; and 

(d) the req-uested information must te reasonably relevant to securing 

canpliance with the legal rule or re:ruiranent specifiEd in the reruest. 

In an:( cas':' where a r~ested Aut.hor~ty is not sa~isfied tha~ a r~t fully 

canphes w1 th the req'..JHBT,ents of tb1s paragraph 1t may rcqu1re tbe Director 

of tbe Division of Enforc611ent of the SD: or CF'IC or the Under Secretary, 

Financial Services Division, Drl, where applicable, tD certify that the 

request is cognizable under the terms of this Manorandum. A re:Ille5te:i 

Authority may not challenge such a certification except on s-ubstantial 

grounds which shall te fully stated in writing. 

Part III. Conditions 

8 Information received. shall te usEd solely for the purpose of: 

(a) securing, through enquiries, investigations or litigation, 

ccxnpliance with or enforcEment of tbe legal rule or requiranent specified 

in the rff!Uest, providEd. that the infonnatioo may te used tD secure 

ccxnpliance with or enforcEment of other applicable legal rules or 

re:auirement,s in a procee:l.ing in which a violation of the legal rule or 

requiranent specified in tbe r~est is alleged; 

(b) securing COTipliance with or enforcenent of a legal rule or 

requiranent that was not specified in the request in a proceeding in 

which a violation of the legal rule or nquiranent specifie::i in the 

request is not alleged, if prior to such use, the requesting Authority 

informs the re;rueste::i Authority of its intentioo to use the information 

for su:::h purpose and the reque:sted Authority does not cbje::t.; or 

(C) conducting a civil or administrative enforcanent procee::ling, 

assisting in a crim.iru.l prosecution, or ronducting any investigation 

related thereto for arr:t general charge applicable to the violatioo of the 

legal rule or requirEJnent identified in the request. 

9 The re:JUesting Authority shall keep confidential.aey infonnatioo 

provided under this Manorandun subject to the tenns of this paragraph, unless 

it is disclosed in furtherano= of the purp:::tSe for which it was requested 

under paragraph 8 al:x:we: 

{a) except as rontenplated ~paragraph 8 aOOve, the requesting 

Authority shall not offer the infonnatioo to, an1 shall use its !::est 

efforts to ensure that it is oot obtaineJ. by', any other p:rsoo. Unless 

otherwise agree:l, in the event that such informatioo is obtained by any 

public tody, the requesting Authority shall use its best efforts tD 

ensure tha.t it will not t:e used by that bcrly in any way that involves its 

disclosure to any other person; 

(b) if the requesting Authority boecangs aware that the information Ms 

= 
" • ' 

I 

!x>e-n or is likely to b::- disclosed othen.rise than as contanplatcd by 

p3ragrat:fi 8 aOOve, it shall infonn the requested Authority of the 

si tu.ation; and 

(c) as S<X>n as the requesting Authority has terrninatej the matter for 

which assistance has beff! rEqUested under this Menorandl.nl, it shall 

return to the reque_s tm Authority, to the extent p2tmi tted by the law of 

the requesting Authority, all documents and copies thereof not already 

disclose:::l in proceed.ings referred to in p:1ragraph 8 atxwe, and other 

material disclosing the content of such dcx::unents, other than material 

which is generated as p3rt of the deliberative or internal analytical 

precess of the rffiUesting Authority, whidl may l::e retaine:L 

10 Any docunent or other rnaterial provided by an Authority in resp:>nse to a 

re:;ruest under this Menorandun arrl any other material disclosing its content, 

other than material which is generated as part of the deliberative ~ 

internal analytical process of the rEqUesting Authority, shall not becxrne the 

property of the requesting Authority, and must be redelivered to the 

requested Authority without delay on dana.rd to the extent permitted by the 

law of the requesting Authority: provided that such dEmand rray be rrade only 

if the rEquested Authority has reason to believe that the infonnation has 

been or is likely to be disclosed or used. otherwise than as contanplaterl by_ 

paragraph 8 above. 

Part IV: other Means of Obtaining Infonration 

11 The Authorities have various powers to obtain infonnation in the 

exercise of regulatory functions wt~ich are within the scope of this 

Meroorandun. These p;::Mers 00 not exteo:::l to the obtaining of infonnatioo on a ~-

canpulsory basis solely for the pur{X)se of securing o:xnpliance with or 

prosecuting breaches of foreign laws. HCJ.o.~ever, if, in the exercise of its 

powers, any Authority obtains information which it recognizes as clearly 

giving rise to a suspicion of a breach of any legal rule or re.:pJiranent of 

any other Authority then it will to the extent pennitted by law offer to 

provide such informatim to such Authority for any purpose, arrl subject to 

canpliance by the other with any conditions, which would have.been awlicable 

had a request teen made. 

12 Nothing in this MEmorandum prevents an Authority ("the investigating 

Authority") fran pursuing any enquiries within or seeking any information 

fran the territory of the other Authority <the "host Authority") otherwise 

than under this Meroorand.un but for a purpose within its scope provided. that: 

(a) any such ~!!-"_~es and the seeking of any such infonnation shall be 

conducta:l w_! thJ ~eratioo arrl restrain_t} an1 

(b) unless the information is sought fran a person within the territory 

of the investigating Authority wix> has possessicn, cust.crl:i or control of 

it, that Authority will only canne.nce such enquiries or seek su::=h 

infonnatioo if: 

(i) it has first made a request of the host Authority for the 

infonnatioo sought in accordance with the provisions of this 

Manorandl.ml ; and 

( ii) the host Authority has failed after reasonable notice to 

satisfy such request; 

I 
provided, ho ... :ever, that in a case of urgency where it is not 

poss1ble or reasonably practicable to make a La:J:uest, the 

investigating A:Jthonty shall give notice to and consult with the 

host AuUlority to the extent practicable; and 

(C) an investigating Authority wh1ch pursues enquiries or seeks 

info!ll\3tim under this pa.ragraph shall enter into consultations with the 

host Authority ab:Jut the matter on request. 

This pa.ragrafh shall have no effect m matters that are outside the scof:€ of 

the Mar.orandwn. 

Part V: Costs 

13 When the oosts of providing or obtaining information under this 

Mf3110randun are subst.aJltial, the re:ruesta:i Authority may rEqUire the 

requesting Authority to undertake to p3.y those costs. 

Part VI: Consultations, Confidentiality of Requests and Waiver 

14 The Authorities will keep the operation of this Manorandun Lmder 

continuous revie..> and consult with a view to improving its operation and 

resolving any matters. In particular, any Authority will consult another 

Authority upon request in the event of: 

{a) a refusal by ooe Authority: 

(i) to c:crnply with a request for information on groWlds that such 

compliance would prejudice the public interest of the United Kingdom 

or the United States; or 

(iil to permit the conduct of enquiries in accordance with 

paragraph 12; 

(bl a change in market or business conditions or in the legislation 

governing the matters mentioned. in p3.ragraph !(h) above or any other 

difficulty arising which makes it necessary to anend or extend this 

HerKlrandun in order to achieve its purposes; or 

(c) an assertion by the requested Authority that the prov1s1on of 

infonnatioo -woold te so burdensc::rre as to disrupt the proQer perfo:tmanoe 

of its functions. 

15 Each Authority will keep confidential to the extent penni ttOO ~ law any 

request for informatim made under this M€Ji\Orandun arrl any matters arising in 

the course of its operation., including oonsultation under this part, mless 

such confidentiality is wa.iva:i by the other Authority. This paragrat*J does 

not apply to general matt.e.rs of proper public interest relating to the 

operation of this Mem:::>randun. 

16 Arrj of the conditions of this Manorandl..ln may be relaxe::l or waived 1.:¥ 

mutual agreanent. 

Part VII: Termination and Future Agreements 

17 This Manorandun is an interim understanding arrl shall tenninate q:x:n 

--.-....--.·-- W4 !G4W 
1 

entry into force of a treaty governing matters relating to the securities arrl 

futures laws of the United States ard the United Kingdcm. The Authorities 

s.'la:l u..c;c their t€st efforts tD ensure t.ha.t negotiations are entered into 

concerning such a treaty between the Unita:l States and the United Kingdcm 

wit.hin 12 rn:Jnths of the date of signature of this Manorandum. 

18 Except as contEmplated in p;-:1ragra;::>h 17 aOOve, this ME'ffi".:Jranch.m shall 

continue to have effect. unless tenninated by any one of the SOC, CFTC or DTI 

by g1ving 30 days advance written notice to the other Authorities that the 

understandings set out herein are no longer to have effect. Such notice may 

in particular ~ given in consEqUence of a change in the laws or regulations 

applicable to any matter governed by this MEmorandum \Nhich is -regarded bj an 

Authority as material and in the absence of an agreEd amerdnent to take 

account of the change. Termination Oj either the SEX: or the CF'IC shall take 

place only with respect. to areas of the Manorandun regarding that agency's 

area of cunpetence and the arranganents relating thereto. Termination Oj the 

IJI'I may take effect with respect to the areas within the ccropetence of the 

SEC and/or the CF'IC and the arrangenents relating thereto and shall be so 

specified. 

SICNED '!HIS ~JrJ, rw Of SEPTEMBER 1986 

SID..IRITIES AND 

EXQiAN::"lE o:M1ISSION 

Chainnan 

(XJIMOOITY FUI'URES 

'ffiADIN::; a.M1ISSION 

Susan M Phillips 

Chairman 

'Ihe Right Hooourable Paul Olannon 

secretary of State for Trade 

and Indus tty