MEMORANDUM OF UNDERSTANDING 

BETWEEN THE 

UNITED STATES COMMODITY FUTURES TRADING COMMISSION 

AND THE 

PORTUGUESE COMMISSAO DO MERCADO DE VALORES MOBILIARIOS 

*.,..,. * *.,. * * * * * * •• * "' * * * * * * * "' * * * * * * * * • * * * * • * 

• * * * • • • • * * * 

CONCERNING CONSULTATION 

AND COOPERATION IN THE 

ADMINISTRATION AND ENFORCEMENT OF 

FUTURES LAWS 

February 4, 1999 

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The United States Commodity Futures Trading Commission and the Portuguese Commisstio 

Do Mercado De Va/ores Mobilitirios, recognizing increased international activity in futures 

and options transactions and acknowledging the need for mutual cooperation to facilitate the 

administration and enforcement of the futures and options laws applicable in their respective 

jurisdictions, have reached the following understanding. This understanding does not create 

legally binding obligations or supersede domestic laws. 

ARTICLE 1: DEFINITIONS 

For the purposes of this Memorandum of Understanding: 

1 .1 "Authority" means: 

1.1.1 the Commodity Futures Trading Commission of the United States; or 

1.1.2 the Commiss§o Do Mercado De Valores Mobili8rios of Portugal. 

1.2 "requested Authority" means an Authority to whom a request is made under 

this Memorandum of Understanding. 

1.3 "requesting Authority" means an Authority making a request under this 

Memorandum of Understanding. 

1 .4 "foreign futures authority" means any foreign government, or any deJ!Jartment, 

agency, governmental body, or regulatory organization empowered by a foreign 

government to administer or enforce a law, rule, or regulation as it relates to a 

futures or options matter, or any department or agency of a political 

subdivision of a foreign government empowered to administer or enforce a law, 

rule, or regulation as it relates to a futures or options matter. 

1.5 "person" means a natural person, unincorporated association, partnership, 

trust, body corporate, or government - or a political subdivision, agency, 

instrumentality or equivalent authority of a government. 

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1.6 "futures contract" means a futures or options transaction regulated or subject 

to regulation by the Authorities whether transacted over-the-counter or on or 

subject to the rules of an exchange or market. 

1.7 "futures business" includes, among others, any person involved in:-the offer, 

purchase or sale of futures contracts for the account of others; the purchase or 

sale of futures contracts for one's own account; advising others for 

compensation, directly or through media, regarding the offer, purchase or sale 

of futures contracts; the management, promotion, offer or sale of collective 

investment schemes involving futures contracts; or equivalent activities. The 

definition of a futures business also includes persons, among others, acting in 

the capacity of commodity trading advisors, commodity pool operators, futures 

commission merchants, introducing brokers, associated persons, floor brokers 

and floor traders. 

1.8 "futures processing business" means a clearing organization for futures 

contracts. 

1.9 "futures laws or regulations" mean the provisions of the laws of the United 

States and/or Portugal, or the regulations promulgated thereunder, concerning: 

1.9.1 

1.9.2 

1.9.3 

1.9.4 

price manipulation or trading ahead of a customer; 

misrepresentation, or the use of fraudulent or deceptive 

practices in connection with the offer, purchase, or sale of 

futures contracts or the conduct of futures businesses; 

the duties of persons to comply with registration and 

reporting requirements; 

the making of false or misleading statements, or any material 

omissions in any application or report to the Authorities; 

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1.9.5 the duties of persons or futures businesses to make full and fair 

disclosure of information in connection with the offer, purchase 

or sale of futures contracts; 

1.9.6 

1.9.7 

1.9.8 

the duties of futures businesses and futures processing 

businesses pertaining to their financial, operationaf or other 

requirements, and their duties of fair dealing in the offer, 

purchase, sale and execution of futures contracts and conduct 

of business; 

the financial and other qualifications of those engaged in, or in 

control of, futures businesses and futures processing 

businesses; and 

any other futures matters that fa!! within the jurisdiction of the 

Authorities. 

ARTICLE 2: ESTABLISHMENT OF A FRAMEWORK FOR CONSULTATIONS 

REGARDING MATTERS OF MUTUAL INTEREST 

The Authorities intend to consult periodically about matters of mutual concern. Such 

consultation will be undertaken in the interest of enhancing cooperation to ensure: the 

efficiency and integrity of the futures markets of the United States and Portugal; customer 

protection; appropriate market oversight; and the effective administration of the futures laws 

and regulations applicable in the United States and Portugal. 

ARTICLE 3: MUTUAL ASSISTANCE AND THE EXCHANGE OF INFORMATION 

3.1: General Principles regarding Mutual Assistance and the Exchange of Information 

3.1 .1 This Memorandum of Understanding sets forth the Authorities' intent with 

regard to mutual assistance and the exchange of information for the purpose of 

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enforcing and securing compliance with the futures laws or regulations 

applicable in their respective jurisdictions. This Memorandum of Understanding 

does not create legally binding obligations or supersede domestic laws. 

3. 1.2 This Memorandum of Understanding does not prohibit an Authority tram taking 

measures other than those herein to obtain information necessary tO ensure 

enforcement of or compliance with the futures laws or regulations applicable in 

its jurisdiction. 

3.1.3 This Memorandum of Understanding does not confer upon any person, other 

than the Authorities designated herein, the ability directly or indirectly to 

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

request for assistance under this Memorandum of Understanding. 

3.1.4 The Authorities recognize the importance and desirability of exchanging 

assistance and information for the purpose of enforcing and securing 

c.;ompliance with the futures laws or regulations applic.;able in their respective 

jurisdictions. However, a request for assistance may be denied by the 

requested Authority: 

3. 1 .4. 1 

3.1.4.2 

3.1.4.3 

where the request would require the requested Authority to act 

in a manner that would violate domestic law; 

where the request is not made in accordance with the provisions 

of this Memorandum of Understanding; or 

on grounds of public interest. 

Where a request for assistance is denied or opposed or where assistance is not 

available under domestic law, the requested Authority will provide the reasons 

for not granting the assistance and consult pursuant to Article 3. 7. 

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3.2: Scope of Assistance 

3.2.1 The Authorities will, within the framework of this Memorandum of 

Understanding, provide each other with the fullest assistance permisSible under 

the laws of the United States and Portugal. Such assistance will be-provided 

in order to facilitate: market oversight, including market and financial 

surveillance; the grant of licenses, authorizations, waivers or exemptions for 

the conduct of futures businesses and futures processing businesses; the 

inspection or examination of futures businesses and futures processing 

businesses; and the investigation, litigation or prosecution by the Authorities of 

activity that potentially violates the futures laws or regulations applicable in 

their respective jurisdictions. Assistance will be provided without regard to 

whether the activity described in the request for assistance would constitute a 

violation of the futures laws or regulations applicable in the jurisdiction of the 

requested Authority. 

3.2.2 The assistance available under this Memorandum of Understanding includes, 

without limitation: 

3.2.2.1 

3.2.2.2 

3.2.2.3 

3.2.2.4 

providing access to information in the files of the requested 

Authority; 

taking statements of persons; 

obtaining information and documents from persons; and 

inspecting or examining futures contracts, futures businesses, 

and futures processing businesses. 

3.2.3 The Authorities recognize that they may not in all circumstances possess the 

legal authority to provide the assistance or information referred to in Article 

3.2. In such circumstances, the Authorities will use all reasonable efforts to 

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obtain the aid of such other governmental agencies that can provide the 

assistance or information described in Article 3.2. 

3.3 Requests For Assistance 

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

requested Authority's contact officer listed in Appendix A. 

3.3.2 Requests for assistance will include the following: 

3.3.2.1 

3.3.2.2 

3.3.2.3 

3.3.2.4 

3.3.2.5 

a general description of both the subject matter of the request 

and the purpose for which the assistance or information is 

sought; 

a general description of the assistance, documents, information, 

or statements sought by the requesting Authority; 

any information in the possession of the requesting Authority 

that might assist the requested Authority in identifying either the 

persons believed to possess the information or documents 

sought or the places where sue~ informalion may be obtained; 

the futures laws or regulations pertaining to the subject matter 

of the request; and 

the desired time period for the reply. 

3.3.3 In urgent circumstances, requests for assistance, and the response to such 

requests, may be effected by summary procedures and may be transmitted by 

means of communication other than the exchange of letters, provided such 

communication is confirmed in writing. 

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3.4: Execution of Requests for Assistance 

3.4. 1 Access to information held in the files of the requested Authority will be 

provided upon the request of the requesting Authority. 

3.4.2 Upon request, the requested Authority will take the statements of an.y person 

involved, directly or indirectly, in the activities that are the subject matter of 

the request for assistance or in possession of information that may assist in 

the execution of the request. The requested Authority will make a transcript of 

any statement it takes on behalf of the requesting Authority. 

3.4.3 Unless otherwise agreed by the Authorities, information and documents 

requested under this Memorandum of Understanding will be gathered in 

accordance with the procedures applicable in the jurisdiction of the requested 

Authority and by persons designated by the requested Authority. 

3.4.4 Notwithstanding Article 3.4.3, any person providing a statement pursuant to a 

request for assistance under this Memorandum of Understanding will have the 

right to have counsel present. 

3.4.5 Notwithstanding any other provision of this Memorandum of Understanding, 

any person providing a statement, information, or documents as a result of a 

request for assistance under this Memorandum of Understanding will be 

entitled to all rights and privileges applicable in the jurisdiction of the requested 

Authority. Assertions regarding rights and privileges arising exclusively under 

the laws applicable in the jurisdiction of the requesting Authority will be 

preserved for consideration by the courts in that jurisdiction. 

3.4.6 Upon request, the requested Authority will inspect or examine specified books, 

records, futures businesses or futures processing businesses. 

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3.4. 7 If it appears that responding to a request for assistance under this 

Memorandum of Understanding will involve substantial cost, the requested 

Authority may, as a condition to executing the request, require the requesting 

Authority to make a contribution to such cost in an amount agreed upon by the 

Authorities. 

3.5: Permissible Uses of Information 

3.5.1 The requesting Authority may use non-public information furnished in response 

to a request for assistance under this Memorandum of Understanding solely: 

3.5.1.1 

3.5. 1.2 

for the purpose stated in the request for assistance with respect 

to ensuring compliance with or enforcement of the futures laws 

or regulations applicable in the jurisdiction of the requesting 

Authority, including the legal provisions specified in the request 

and related rrnvi.o;inn.<>; ;mrl 

for a purpose within the general framework of the use stated in 

the request for assistance, including conducting an adjudicatory 

action or proceeding, conducting -market and financial 

surveillance, assisting in a criminal prosecution, or conducting 

any related investigation for any general charge applicable to the 

violation of the provision specified in the request. 

3.5.2 Before using non-public information furnished under this Memorandum of 

Understanding for a purpose other than those stated in Article 3.5.1, the 

requesting Authority must first inform the requested Authority of the intended 

use and provide the requested Authority with an opportunity to refuse such 

use. If the requested Authority refuses the intended use, the Authorities will 

consult pursuant to Article 3. 7 to discuss the reasons for the refusal and the 

circumstances under which the intended use might otherwise be allowed. 

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3.6 Confidentiality 

3.6.1 Each Authority will keep confidential, to the extent permitted by law, requests 

made under this Memorandum of Understanding, the contents- of such 

requests, and any matters arising under this Memorandum of Understanding. 

3.6.2 The requesting Authority will not disclose non-public information received 

under this Memorandum of Understanding, except pursuant to a legally 

enforceable demand, or in connection with an adjudicatory action or 

proceeding brought under the laws applicable in the jurisdiction of the 

requesting Authority to which the requesting Authority or its government, or a 

political subdivision thereof, is a party. 

3.6.3 To the extent possible, the requesting Authority will notify the requested 

Authority of any legally enforceable demand for non-public information 

furnisherJ tmrler this Memorandum of Understanding prior to compliance, andwill assert such appropriate legal exemptions or privileges with respect to such 

information as may be available. 

3.6.4 To the extent permitted by law, the Authorities may by mutua! consent make 

an exception to the principles set forth in Articles 3.6.1 and 3.6.2. 

3.7: Consultation Regarding Mutual Assistance and the Exchange of Information 

3. 7. 1 The Authorities will consult with each other regarding this Memorandum of 

Understanding with a view to improving its operation and resolving any 

matters that may arise. In particular, the Authorities will, upon request, consult 

in the event of: 

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3.7.1. 1 

3.7.1.2 

3.7.1.3 

a dispute over the meaning of any term used in this 

Memorandum of Understanding; 

an Authority's denial of or opposition to a request or proposal 

made by the other Authority pursuant to this Memorandum of 

Understanding; or 

a change in market or business conditions or in the legislation 

governing the matters set forth in Article 1 .9 or any other 

circumstance that makes it necessary or appropriate to amend or 

extend this Memorandum of Understanding in order to achieve 

its purposes. 

3.7.2 The Authorities may agree on such practical measures as may be necessary to 

facilitate the implementation of this Memorandum of Understanding. 

3.7.3 Any of the conditions of this Memorandum of Understanding may be amended, 

relaxed, or waived by mutual consent. 

3.8: Unsolicited Assistance 

To the extent permitted by the laws and regulations of their respective jurisdictions, 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 applicable in the jurisdiction of the other Authority. 

ARTICLE 4: FINAL PROVISIONS 

4.1: Effective Date 

Cooperation in accordance with this Memorandum of Understanding will begin on the date of 

its signing by the Authorities. 

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4.2: Termination 

Cooperation and assistance 1n accordance with this Memorandum of Understanding will 

continue until the expiration of 30 days after either Authority gives written notice to the other 

Authority of its intention to discontinue cooperation and assistance. If either Authority gives 

such notice, cooperation and assistance in accordance with this Memorandum of 

Understanding will continue with respect to all requests for assistance that were made before 

the effect'1ve date of notification until the requesting Authority terminates the matter for 

which assistance was requested. 

FOUn ORIGINALS SIGNED 

r'el:.r"'"ft} 1999, TWO 

EOUALL Y A THORITATIVE. 

IN LONDON, UNITED KINGDOM 

IN ENGLISH, TWO IN PORTUGUESE, 

this J/f~ day of 

ALL OF WHICH ARE 

FOR THE COMMODITY FUTURES 

TRADING COMMISSION OF 

THE UNITED STATES: 

Chairperson 

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FOR THE COMMISSi\0 DO 

MERCADO DE VALORES 

MOBILIARIOS OF PORTUGAL: 

Jose Nunes Pereira 

Chairman