MEMORANDUM OF UNDERSTANDING 


SECURITIES AND 

FUTURES COMMISSION 

:11~&!V!~J~t~fHtt 

United States Commodity Futures Trading Securities and Futures Commission 

Commission 

COOPERATION AND THE EXCHANGE OF INFORMATION 


RELATED TO THE SUPERVISION OF CROSS-BORDER COVERED ENTITIES 


21 December 2015 
MEMORANDUM OF UNDERSTANDING CONCERNING COOPERATION 


AND THE EXCHANGE OF INFORMATION RELATED TO THE SUPERVISION 


OF CROSS-BORDER COVERED ENTITIES 


In view ofthe growing globalization ofthe world's financial markets and the increase in crossborder operations and activities ofregulated entities, the United States Commodity Futures Trading 

Commission and the Hong Kong Securities and Futures Commission Goinlly, the "Authorities") 

have reached this Memorandum ofUnderstanding ("MOU") regarding cooperation and the 

exchange ofinformation in the supervision and oversight ofregulated entities that operate on a 

cross-border basis in both the United States and Hong Kong. The Authorities express, through this 

MOU, their willingness to cooperate with each other in the interest offulfilling their respective 

regulatory mandates. 

ARTICLE ONE: DEFINITIONS 

For purposes ofthis MOU: 

1. 	 "Authority" means: 

a. 	 In the United States, the Commodity Futures Trading Commission ("CFTC"); or 

b. 	 In Hong Kong, the Securities and Futures Commission ("SFC"). 

2. 	 "Requesting Authority" means the Authority making a request under this MOU. 

3. 	 "Requested Authority" means the Authority to whom a request is made under this MOU. 

4. 	 "Laws and Regulations" means: 

a. 	 For the CFTC, the Commodity Exchange Act, Dodd-Frank Wall Street Refo1m and 

Consumer Protection Act, CFTC regulations, and other related requirements in the 

United States; and 

b. 	 For the SFC, the Securities and Futures Ordinance ("SFO") and other related 

requirements in Hong Kong. 

5. 	 "Person" means a natural person, unincorporated association, pmtnership, ttust, 

investment company, or corporation, and may be a Covered Entity or Cross-Border 

Covered Entity. 

6. 	 "Covered Entity" means a Person that is, or that has applied to be, authorized, licensed, 

approved, designated, recognized, qualified, registered, supervised, or overseen by one 

or both ofthe Authorities pursuant to Laws and Regulations and may include regulated 

markets and organized trading platforms, central counterparties, and intermediaries, 

dealers, or other market pa11icipants. With respect to the SFC, a collective investment 

scheme as a Covered Entity shall only mean a collective investment scheme that is 

authorized by the SFC pursuant to Section 104 of the SFO, and managed by a 

corporation which is licensed by or registered with the SFC to carry out type 9 (asset 

management) regulated activity under the SFO. 
7. 	 "Cross-Border Covered Entity" means: 

a. 	 A Covered Entity of both the CFTC and the SFC; 

b. 	 A Covered Entity of one Authority that has been exempted from authorization, 

licensure, approval, designation, recognition, qualification, or registration by the 

other Authority; 

c. 	 A Covered Entity in one jurisdiction that controls or is controlled by a Covered 

Entity located in the other jurisdiction; or 

d. 	 A Covered Entity in one jurisdiction that is physically located in the other 

jurisdiction (with respect to which any regulatory visit to its premises would not be 

subject to At1icle Five). 

For purposes ofthis MOU, references to jurisdiction will be dete1mined as either the 

jurisdiction ofthe CFTC or the jurisdiction ofthe SFC. Information sharing pursuant to 

this MOU relates to information already in the possession of an Authority. 

8. 	 "Books and Records" means documents, electronic media, and books and records within 

the possession, custody, or control of, and other information about, a Cross-Border 

Covered Entity. 

9. 	 "Emergency Situation" means the occurrence of an event that could materially impair 

the financial or operational condition of a Cross-Border Covered Entity. 

10. "On-Site Visit" means any regulatory visit to the premises of a Cross-Border Covered 

Entity for the purposes of ongoing supervision and oversight, including the inspection of 

Books and Records. 

11. "Local Authority" means the Authority in whose jurisdiction a Cross-Border Covered 

Entity that is the subject of an On-Site Visit is physically located. 

12. "Visiting Authority" means the Authority conducting an On-Site Visit. 

ARTICLE TWO: GENERAL PROVISIONS 

13. This MOU is a statement ofintent to consult, cooperate and exchange information in 

connection with the supe1vision and oversight ofCross-Border Covered Entities. The 

cooperation and information sharing an-angements under this MOU should be 

interpreted and implemented in a manner that is permitted by, and consistent with, the 

laws and requirements applicable to each Authority. With respect to cooperation 

pursuant to this MOU, no domestic secrecy or blocking laws or regulations should 

prevent an Authority from providing assistance to the other Authority. The Authorities 

anticipate that cooperation primarily will be achieved through ongoing inf01mal 

consultations, supplemented as needed by more formal cooperation. The provisions of 

this MOU are intended to suppo11 both info1mal consultations and formal cooperation, as 

well as to facilitate the written exchange of non-public information in accordance with 

applicable laws. 

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14. This MOU does not create any legally binding obligations, confer any rights, or 

supersede domestic laws. This MOU does not confer upon any Person the right or 

ability directly or indirectly to obtain, suppress, or exclude any information or to 

challenge the execution of a request for assistance under this MOU. 

15. This MOU is not intended to limit or condition the discretion of an Authority in any way 

in the discharge of its regulatory responsibilities or to prejudice the individual 

respo~sibilities or autonomy ofany Authority. This MOU does not limit an Authority to 

taking solely those measures described herein in fulfillment ofits supervisory functions, 

or preclude Authorities from sharing information or documents with respect to Persons 

that are not Cross-Border Covered Entities but may be subject to statutory and regulatory 

requirements in the United States or in Hong Kong. In particular, this MOU does not 

affect any tight of any Authority to communicate with, conduct an On-Site Visit of 

(subject to the procedures described in Article Five), or obtain information or documents 

from any Person subject to its jurisdiction that is physically located in the jurisdiction of 

the other Authority. 

16. This MOU is intended to complement, hut does not alter, the terms and conditions ofthe 

following existing arrangements: 

a. 	 The Memorandum ofUnderstanding Concerning Consultation and Cooperation in 

the Administration and Enforcement ofFutures Laws (October 5, 1995). 

b. 	 The Declaration on Cooperation and Supervision ofCross-Border Managed Futures 

Activity (October 5, 1995). 

c. 	 The IOSCO Multilateral Memorandum ofUnderstanding Concerning Consultation 

and Cooperation and the Exchange ofInformation (revised May 2012) ("IOSCO 

MMOU") to which the CFTC and the SFC are signatories, which covers primarily 

information sharing in the context ofenforcement matters. 

d. 	 The Declaration on Cooperation and Supervision ofIntemational Futures Markets 

and Clearing Organizations (as amended March 1998), to which the CFTC and SFC 

are signatories. 

17. To facilitate cooperation under this MOU, the Authorities hereby designate contact 

persons as set forth in Appendix A, which may be amended from time to time by an 

Authority transmitting revised contact information to the other Authority. 

ARTICLE THREE: SCOPE OF SUPERVISORY CONSULTATION, 

COOPERATION, AND EXCHANGE OF INFORMATION 

General 

18. The Authorities recognize the importance of close communication concerning CrossBorder Covered Entities and intend to consult regularly, as appropriate, regarding: 

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a. 	 General supervisory issues, including regulatory, oversight, or other related 

developments; 

b. 	 Issues relevant to the operations, activities, and regulation ofCross-Border Covered 

Entities; and 

c. 	 Any other areas of mutual supervisory interest. 

19. The Authorities recognize in pa1ticular the importance of close cooperation in the event 

that a Cross-Border Covered Entity, particularly one whose failure likely would be 

systemically imp01tant to an Authority, experiences, or is tlu-eatened by, a potential 

financial crisis or other Emergency Situation. 

20. Cooperation will be most useful in, but is not limited to, the following circumstances 

where issues of common regulatory concern may arise: 

a. 	 The initial application with the CFTC or the SFC for authorization, licensure, 

approval, designation, recognition, qualification, or registration, or exemption 

therefrom, by a Covered Entity that is authorized, licensed, approved, designated, 

recognized, qualified, or registered by an Authority in the other jurisdiction; 

b. 	 The ongoing supervision and oversight of a Cross-Border Covered Entity, including 

compliance with statuto1y and regulatory requirements in either jurisdiction or with 

international standards; and 

c. 	 Regulatory or supervisory actions or approvals taken in relation to a Cross-Border 

Covered Entity by the CFTC or the SFC that may materially impact the operations of 

the entity in the jurisdiction ofthe other Authority. 

Event-Triggered Notification 

21. As appropliate in the paiticular circumstances, each Authority will endeavor to inform 

the other Authority promptly, and where practicable in advance, of: 

a. 	 Pending regulatory changes that may have a significant impact on the operations, 

activities, or reputation of a Cross-Border Covered Entity, including those that may 

affect the rules, policies, or procedures of a Cross-Border Covered Entity; 

b. 	 Any material event of which the Authority is aware that could adversely impact the 

financial or operational stability of a Cross-Border Covered Entity. Such events 

include any known adverse material change in the ownership, operating 

environment, operations, financial resources, management, or systems and controls 

of a Cross-Border Covered Entity, or the failure of a Cross-Border Covered Entity to 

satisfy any of its requirements for continued authorization, licence, approval, 

designation, recognition, qualification, registration, or exemption therefrom, where 

that failure could have a material adverse effect in the jurisdiction ofthe other 

Authority. For a Cross-Border Covered Entity that is a central counterpaity, such 

events also include market or settlement bank difficulties that might materially and 

adversely affect the central counterparty or a default or potential default of a clearing 

member firm or patticipant; 

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c. 	 The status of efforts ofwhich the Authority is aware to address any material 

financial or operational difficullies experiem:ed by a Cross-Border Covered Entity as 

described in Subparagraph b; and 

d. 	 Enforcement actions or sanctions or significant regulatory actions, including the 

revocation, suspension, or modification ofrelevant authodzation, licence, approval, 

designation, recognition, qualification, or registration, or exemption therefrom, 

concerning a Cross-Border Covered Entity. 

22. The determination ofwhat constitutes "significant impact", "material event", "adversely 

impact'', "adverse material change'', "material adverse effect", "market or settlement 

bank difficulties", "materially and adversely affect", "material financial or operating 

difficulties", or "significant regulatory actions" for the pmposes ofParagraph 21 shall be 

left to the reasonable discretion ofthe relevant Authority that determines to notify the 

other Authority. 

Request-Based Information Sharing 

23. To the extent appropriate to supplement informal consultations, upon written request, the 

Requested Authority intends to provide the Requesting Authority with the fullest 

possible cooperation subject to the terms in this MOU in assisting the Requesting 

Authority's supervision and oversight of Cross-Border Covered Entities. Such requests 

shall be made pursuant to Article Four ofthis MOU, and the Authorities anticipate that 

such requests will be made in a manner that is consistent with the goal of minimizing 

administrative burdens. 

24. The assistance covered by Paragraph 23 includes but is not limited to: 

a. 	 Information relevant to the financial and operational condition of a Cross-Border 

Covered Entity including, for example, financial resources, risk management, 

internal control procedures, and non-public corporate information. license or 

membership history and status, and regulatory and disciplinary records; 

b. 	 Relevant regulatory information and filings that a Cross-Border Covered Entity is 

required to submit to an Authority including, for example, interim and annual 

financial statements and early warning or event-specific notices; and 

c. 	 Regulatory reports prepared by an Authority, including, for example, examination 

repo1ts, findings, or information contained in such repot1s regarding Cross-Border 

Covered Entities. 

25. Where an Authority has info1mation that it believes will assist the other Authority in the 

perfo1mance ofits supervisory functions, the former may provide such information on a 

voluntary basis, or notify the other Authority of the existence of such information to 

enable the other Authority to determine whether to make a fotmal request for such 

information, and the te1ms and the conditions ofthis MOU will apply unless the 

providing Authority specifies otherwise. 

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Periodic Meetine;s 

26. Representatives of the Authorities intend to meet when approp1'iate to update each other 

on their respective functions and regulatory oversight programs and to discuss issues of 

common interest relating to the supervision of Cross-Border Covered Entities, including: 

contingency planning and crisis management, systemic risk concerns, default 

procedures, the adequacy of existing cooperative aITangements, and the possible 

improvement of cooperation and coordination between the Authorities. Such meetings 

may be conducted by conference call or on a face-to-face basis, as appropriate. 

ARTICLE FOUR: EXECUTION OF REQUESTS FOR INFORMATION 

27. To the extent possible, a request for information pursuant to A11icle Tln·ee should be 

made in writing (which may be transmitted electronically}, and addressed to the relevant 

contact person in Appendix A. A request generally should specify the following: 

a. The inf01mation sought by the Requesting Authority; 

b. A general description ofthe matter that is the subject ofthe request; 

c. The supervisory purpose for which the information is sought; and 

d. The desired time period for reply and, where appropriate, the urgency thereof. 

Information responsive to the request, as well as any subsequent communication among 

the Authorities, may be transmitted electronically. Any electronic transmission should 

use means that are appropriately secure in light of the confidentiality ofthe information 

being transmitted. 

28. In an Emergency Situation, the Authorities will endeavor to notify each other as soon as 

possible ofthe Emergency Situation and communicate infmmation as appropriate in the 

pal1icular circumstances, taking into account all relevant factors, including the status of 

effo1ts to address the Emergency Situation. During an Emergency Situation, requests for 

information may be made in any form, including orally, provided such communication is 

confirmed in writing as promptly as possible following such notification. 

ARTICLE FIVE: ON-SITE VISITS 

29. In fulfilling its supervision and oversight responsibilities pursuant to, and to ensure 

compliance with, its Laws and Regulations, an Authority (the "Visiting Authority") may 

need to conduct On-Site Visits to a Cross-Border Covered Entity physically located in 

the jurisdiction ofthe other Authority (the "Local Authority"). The Visiting Authority 

will consult and work collaboratively with the Local Authority in conducting an On-Site 

Visit. 

30. An On-Site Visit by a Visiting Authority will be conducted in accordance with the 

following procedure: 

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a. 	 The Visiting Authority intends to provide advance notice to the Local Authority of 

its intent to conduct an On-Site Visit and the intended timeframe for, and the purpose 

and scope of, the On-Site Visit. Other than in exceptional circumstances, the 

Visiting Authority will notify the J,ocal Authority prior to notifying the Cross-Border 

Covered Entity. 

b. 	 The Local Authority will endeavor, ifso requested, to share any relevant repo11s, or 

infonnation .contained therein, related to examinations it may have undertaken ofthe 

Cross-Border Covered Entity. 

c. 	 The Authorities will endeavor, if so requested, to assist each other regarding On-Site 

Visits, including providing info1mation that the Visiting Authority may request and 

that is available prior to the On-Site Visit; cooperating and consulting in reviewing, 

interpreting, and analyzing the contents of public and non-public Books and 

Records; and obtaining information from directors and senior management of a 

Cross-Border Covered Entity. 

d. 	 The Authorities will consult with each other, and the Local Authority may in its 

discretion accompany or assist the Visiting Authority during the On-Site Visit, or the 

Authorities may conduct concurrent visits where appropriate. 

e. 	 The Authorities will communicate with each other, including meetings as appropriate 

during the On-Site Visit. After concluding an On-Site Visit, the Visiting Authority 

will communicate any major issues to the Local Authority that may impact 

negatively upon the authorization, licensure, approval, designation, recognition, 

qualification, registration, or exemption ofthe Cross-Border Covered Entity. 

ARTICLE SIX: PERMISSIBLE USES OF INFORMATION 

31. The Requesting Authority may use non-public information obtained under this MOU 

solely for the supervision and oversight of Cross-Border Covered Entities pursuant to, 

and to ensure compliance with, the Laws and Regulations ofthe Requesting Authority. 

32. The Authorities recognize that, while this MOU is not intended to gather infonnation for 

enforcement purposes, the Authorities subsequently may want to use the non-public 

information provided pursuant to this MOU for enforcement purposes. Jn cases where a 

Requesting Authority seeks to use non-public infonnation obtained pursuant to this 

MOU fol' enforcement pmposes, including in conducting investigations or taking 

enforcement action, the Requesting Authority will submit to the Requested Authority a 

separate request under the IOSCO MMOU. 

33. Before using non-public inf01mation fumished under this MOU for any purpose other 

than those stated in Paragraphs 31 and 32, the Requesting Authority must first consult 

with and obtain the written consent ofthe Requested Authority for the intended use. If 

consent is denied by the Requested Authority, the Authorities will consult to discuss the 

reasons for withholding approval ofsuch use and the circumstances, if any, under which 

the intended use by the Requesting Authority might be allowed. 

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34. Ifan Authority ("Receiving Authority") receives, via a party that is not a signatory to 

this MOU, non-public information originally provided by the other Authority 

("Disclosing Authority") that is related to the Disclosing Authority's supe1vision and 

oversight of a Cross-Border Covered Entity that the Receiving Authority is aware was 

obtained by the third party from the Disclosing Authority on a confidential basis, the 

Receiving Authority will use and treat the information in accordance with the te1ms of 

this MOU. 

3 5. The restrictions in this Article do not apply to an Authority's use of information it 

obtains directly from a Cross-Border Covered Entity, whether during an On-Site Visit or 

otherwise. However, where non-public information is provided to the Requesting 

Authority pursuant to a provision ofthis MOU, the restrictions in this MOU apply to the 

use of the information by that Requesting Authority. 

ARTICLE SEVEN: CONFIDENTIALITY OF INFORMATION AND ONWARD SHARING 

36. Except as provided in Paragraph 37, each Authority will keep confidential, to the extent 

permitted by law, non-public information shared under this MOU, requests made under 

this MOU, the contents ofsuch requests, and any other matters arising under this MOU. 

37. The Requesting Authority must obtain the prior written consent ofthe Requested 

Authority before disclosing non-public information received under this MOU to any 

non-signatory to this MOU. The Requested Authority will take into account the level of 

lll'gency ofthe request and respond in a timely manner. During an Emergency Situation, 

consent may be obtained in any fotm, including orally, provided such communication is 

confirmed in wiiting as promptly as possible following such notification. If consent is 

denied by the Requested Authority, the Requesting and Requested Authorities will 

consult to discuss the reasons for withholding approval of such disclosure and the 

circumstances, if any, under which the intended disclosure by the Requesting Authority 

might be allowed. 

38. To the extent possible, the Requesting Authority intends to notify the Requested 

Authority of any legally enforceable demand for non-public infmmation furnished under 

this MOU. When complying with the demand, the Requesting Authority shall assist in 

preserving the confidentiality of the infmmation by taking all appropriate measures 

including asserting all appropriate legal exemptions or privileges with respect to such 

information as may be available. 

39. The Authorities intend that the sharing or the disclosure ofnon-public information, 

including deliberative and consultative matetia1s, such as written analysis, opinions, or 

recommendations relating to non-public information that is prepared by or on behalf of 

an Authority, pursuant to the te1ms ofthis MOU, will not constitute a waiver ofprivilege 

or confidentiality of such info1mation. 

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ARTICLE EIGHT: AMENDMENTS 

40. The Authorities will periodically review the functioning and effectiveness of cooperation 

atTangements between them with a view, inter alia, to expanding or a]tering the scope or 

operation ofthis MOU should that be judged necessary. This MOU may be amended 

with the written consent ofthe Authorities refe1Ted to in Paragraph 1. 

ARTICLE NINE: EXECUTION OF MOU 

41. Cooperation in accordance with this MOU will become effective on the date this MOU 

is signed by the Authorities. 

ARTICLE TEN: TERMINATION 

42. Cooperation in accordance with this MOU will continue until the expiration of 30 days 

after either Authority gives written notice to the other Authority of its intention to 

lerminate the MOU. Ifeither Auth01ity gives such notice, the Authorities will consult 

concerning the disposition of any pending requests. If an agreement cannot be reached 

through consultation, cooperation will continue with respect to all requests for assistance 

that were made under the MOU before the expiration of the 30-day period until all 

requests are fulfilled or the Requesting Authority withdraws such request(s) for 

assistance. In the event oftermination ofthis MOU, information obtained under this 

MOU will continue to be treated in the manner described under Articles Six and Seven. 

21 December This MOU is executed in duplicate, this ___ day of _______2015. 

Chief Executive Officer 

Hong Kong Securities and Futures Commission 

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APPENDIX A 

CONTACT PERSONS 

In addition to the following contact information, the CFTC and the SFC will exchange confidential 

emergency contact telephone information. 

CFTC 

Jeffrey M. Bandman 

Acting Director, Division ofClearing and Risk 

Commodity Futures Trading Commission 

1155 21st Street, N.W. 

Washington, DC 20581 

Phone:202-418-5044 

Fax: 202-418-5547 

Email: jbandman@cftc.gov 

Eileen T. Flaherty 

Director, Division of Swap Dealer and Intermediary Oversight 

Commodity Fulures Trading Commission 

1155 21 81 Street, N.W. 

Washington, DC 20581 

Phone: 202-418-5326 

Fax: 202-418-5407 

Email: eflaherty@cftc.gov 

Vince McGonagle 

Director, Division ofMarket Oversight 

Commodity Futures Trading Commission 

1155 2151 Street, N.W. 

Washington, DC 20581 

Phone:202-418-5387 

Fax: 202-418-5507 

Email: vmcgonagle@cftc.gov 

SFC 

Christine Kung 

Senior Director, Intemational Affairs 

Securities and Futw-es Commission 

35/F, Cheung Kong Center 

2 Queen's Road Central, Hong Kong 

Phone: (852) 2231 1558 

Fax: (852) 2293 5724 

Email: intemational@sfc.hk 

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Rico Leung 

Senior Director, Supervision ofMarkets DivisionSccuritics and Futures Commission 

35/F, Cheung Kong Center 

2 Queen's Road Central, Hong Kong 

Phone: (852)2231 1357 

Fax: (852) 2293 5792 

Email: rleung@sfc.hk 

Stephen Po 

Senior Director, Intermediaries Supervision 

Intermediaries Division 

Securities and Futures Commission 

35/F, Cheung Kong Center 

2 Queen's Road Central, Hong Kong 

Phone: (852) 2231 1633 

Fax: (852) 2293 5933 

Email: spo@sfc.hk 

Greg Heaton 

Senior Director, Licensing 

Intermediaries Division 

Securities and Futures Commission 

35/F, Cheung Kong Center 

2 Queen's Road Central, Hong Kong 

Phone: (852) 22312066 

Fax: (852) 2293 5832 

Email: gregheaton@sfc.hk 

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