MEMORANDUM OF UNDERSTANDING 

BETWEEN THE 

UNITED STATES SECURITIES AND EXCHANGE 

COMMODITY. FUTURES BOARD. OF INDIA 

TRADING COMMISSION 
MEMORANDUM OF UNDERSTANDING 

BETWEEN THE 

UNITED STATES COMMODITY FUTURES TRADING COMMISSION 

AND 

THE SECURITIES AND EXCHANGE BOARD OF INDIA 

REGARDING FUTURES REGULATORY COOPERATION, CONSULTATION 

AND THE PROVISION OF TECHNICAL ASSISTANCE 

The United States Commodity Futures Trading 

Commission ("CFTC") and the Securities and Exchange 

Board of India ("SEBI") (collectively, "the Authorities"), 

Sharing the goal of building and maintaining open, fair, 

efficient and sound futures markets, 

Recognizing that the development of effective domestic 

legal and regulatory structures is essential to market 

integrity and investor protection, 

Believing that international cooperation can facilitate the 

development and effective operation of futures markets, 

and 

Desiring to establish a mutually acceptable basis for 

cooperation and consultation, 

Have reached the following understanding: 

CLAUSE I OPERATION AND CONSULT AT ION 

Section 1. General Principles 

1. The United States Congress created the CFTC as an 

independent agency in 197 4. The mission of the CFTC 

is to protect market users and the public from fraud, 

manipulation, and abusive practices related to the sale:: 

of commodity futures and options and to foster open, 

competitive, and financially sound commodity futures 

and options markets in the United States. 

2 

) 
2. The SEBI was .established under SEBI Act, 1992 to 

regulate the securities market in India. The objectives of 

the SEBI are to protect the interest of investors, and to 

promote development of and to regulate the 

development of the securities markets and related 

derivatives markets in India. 

3. This Memorandum of Understanding Regarding 

Futures Regulatory Cooperation, Consultation and the 

Provision of Technical Assistance (MOU) in respect of 

futures and options markets within the Authorities' 

regulatory jurisdiction describes the intent of the 

Authorities and does not create legally binding 

obligations or supersede domestic law of either 

Authority. 

4. The Authorities recognize the need and desirability of 

providing assistance, as set forth in Clauses II and Ill, to 

each other pursuant to this MOU. The provision of any 

such assistance should be consistent with the domestic 

laws of the Authorities and the availability of resources. 

Where the provision of assistance would be contrary to 

the public interest of an Authority, such assistance may 

be denied. 

Section 2. Consultation 

The Authorities intend to consult periodically about 

matters of mutual interest in order to promote 

cooperation and market integrity, and to further the 

protection of futures and options market participants. 

Such consultation may cover, among other things, the 

development of prudential standards and conduct of 

business standards for the operation of futures 

businesses (brokers, dealers and markets), the 

development of clearance and settlement and other 

market systems, market oversight, and the 

administration of the Authorities' futures and options 

laws, rules, and regulations. The purpose of sue!]__ 

consultation is to assist in the development of effectiveapproaches to strengthening domestic and international 

futures and options markets. 

3 
Section 3. Information Sharing 

The Authorities intend to share information on each 

other's laws, rules and regulations pertaining to futures 

and options markets, if applicable, and how those laws, 

rules and regulations are implemented and interpreted. 

CLAUSE II PROVISION OF TECHNICAL 

ASSISTANCE FOR THE 

DEVELOPMENT OF THE 

SECURITIES AND EXCHANGE 

BOARD OF INDIA 

Section 1. Technical Assistance 

In furtherance of the objective of promoting the 

development of sound futures and options regulatory 

mechanisms, the CFTC may, upon a request by SEBI, 

consult with and provide advice to SEBI with a view to 

establishing and implementing an ongoing technical 

assistance program. In this regard, the Authorities 

intend to work together to identify and address, subject 

to the availability of personnel and other resources, 

training and technical assistance needs to facilitate the 

development of a regulatory framework for the 

development, administration, and operation of the 

futures and options markets in India as well as the crossborder trading of futures and options products, including: 

a. Systems to improve and/or promote the risk 

management, price discovery and hedging 

functions of markets; 

b. Futures and options products and the basics of 

designing contracts not readily susceptible to 

manipulation; 

c. Order handling systems; 

d. Transaction recording and comparison systems; 

e. Quotation and transaction data transmission 

systems; 

4 
f. Clearance and settlement mechanisms; 

g. Regulatory requirements and best practices 

relating to market professionals, products and 

markets; 

h. Systems and related regulatory mechanisms 

relating to financial surveillance; 

i. Systems for effective market surveillance and 

enforcement programs; 

j. Disclosure and other procedures and practices to 

inform and protect futures and options customers 

and market participants; and 

k. Information on transparency. 

Section 2. Specific Technical Assistance 

Specific technical assistance may be provided in the 

fol_lowing manner: 

a. Comment by CFTC staff on draft laws and 

regulations; 

b. Availability of CFTC staff and other relevant 

experts to provide consultation, on or offsite, 

regarding futures and options markets; 

c. General training sessions concerning futures and 

options regulation; and 

d. Internship programs of short duration for SEBI 

personnel at the CFTC, conditioned upon the._ 

availability of staff, requisite legal authority to do~ 

so and the entering into of any necessary 

confidentiality agreements. 

5 

~· 
CLAUSE Ill COOPERATfON 

Each Authority may, subject to Clause IV, Section 2, 

give assistance as to: 

a. The granting of licenses, waivers, or exemptions 

for· the conduct of futures business; 

b. The laws and regulations applicable to futures 

business; 

c. The ·taws and regulations applicable to futures 

exchanges and other types of markets; 

d. The oversight of futures exchanges by regulatory 

and market authorities; 

e. The prevention and detection of futures and 

options fraud and other irregularities or unlawful 

activities in connection with· the offer, purchase or 

sale of any futures or options contract; and 

f. The prevention and detection of market 

. manipulation . 

CLAUSE IV OPERATIONS 

Section 1. Laws. Rules and Requirements 

The Authorities have exchanged general information o~ 

the laws, rules and requirements applicable to the 

confidentiality and use of information and intend to abide 

by same. 

6 

) 
Section 2. Requests 

Requests for assistance under Clause Ill, procedures for 

making and executing such requests, permissible uses 

of information, confidentiality requirements, costs and 

other matters not explicitly included in this MOU should 

be addressed on a case-by-case basis. 

Section 3. Official Contacts 

To further ensure the effective operation of this MOU, 

and to facilitate communication between the Authorities, 

the Authorities hereby designate the contact officials set 

forth in Attachment A. 

CLAUSEV FUTURE UNDERSTANDINGS 

1. The Authorities plan to regularly review their efforts 

pursuant to this MOU with a view toward improving 

communication between them. In this regard, when 

material additions or amendments to new United States 

and/or India futures and options laws take effect, the 

Authorities intend to consider whether this MOU should 

be supplemented or superseded. 

2. The Authorities intend to move toward more formal 

information sharing arrangements after they have some 

experience with the operation of this MOU. · 

3. This MOU is not intended to supersede the IOSCO 

Multilateral MOU or any other arrangement to which the 

Authorities are a party. 

7 
CLAUSE VI EFFECTIVE DATE AND TERMINATION 

Section 1 . Effective Date 

This MOU is effective from the date of its signing by the 

Authorities. 

Section 2. Termination 

Either Authority may terminate this MOU at any time by 

giving thirty days' written notice to the other Authority. If 

such notice is given, this MOU should 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 lor which 

assistance was requested. 

This MOU is executed in duplicate in Washington, DC on April 28, 2004 

FOR THE UNITED STATES 

COMMODITY FUTURES 

TRADING COMMISSION: 

FOR THE SECURITIES AND 

EXCHANGE BOARD OF INDIA: 

G. N. BAJPAI 

CHAIRMAN 

8 
ATTACHMENT A 

The United States Commodity Futures Trading 

Commission designates as its contact official: 

Director 

Office of International Affairs 

. Commodity Futures Trading Commission 

3 Lafayette Centre · 

1155 21st Street, NW 

Washington, DC 20581-0001 

USA 

Tel: 1 202 418 5645 

Fax: 1 202 418 5548 

e-mail: international@cftc.gov 

The Securities and Exchange Board of India designates 

as its contact official: 

The General Manager 

Office of International Affairs 

Securities and Exchange Board of India 

Mittal Court, 8 Wing, 1st Floor 

224 Nariman Point 

Mumbai 400 021 

INDIA 

Tel: 91 22 22829474 

Fax: 91 22 22835692 

e-mail: oia@sebi.gov.in 

9