MEMORANDUM OF UNDERSTANDING 


United States Commodity Futures Trading Korean Financial Services Commission 

Commission 

Korean Financial Supervisory Service 

COOPERATION AND THE EXCHANGE OF INFORMATION 


RELATED TO THE SUPERVISION OF CROSS-BORDER CLEARING ORGANIZATIONS 


September 25, 20 15 
MEMORANDUM OF UNDERSTANDING CONCERNING COOPERATION 


AND THE EXCHANGE OF INFORMATION RELATED TO THE SUPERVISION 


OF CROSS-BORDER CLEARING ORGANIZATIONS 


In view ofthe growing globalization ofthe world's financial markets and the increase in cross-border 

operations and activities of regulated entities, the United States Commodity Futures Trading 

Commission and the Korean Financial Services Commission and Financial Supervisory Service 

(collectively, the "Authorities") have reached this Memorandum ofUnderstanding ("MOU") 

regarding cooperation and the exchange ofinformation in the supervision and oversight of clearing 

organizations that operate on a cross-border basis in both the United States and the Republic ofKorea 

("Korea"). 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: 

l. 	 "Authority" means: 

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

b. 	 In Korea, the Financial Services Commission ("FSC") and the Financial Supervisory 

Service ("FSS") (individually, a "Korean Authority", and together referred to as the 

"Korean Authorities"). 

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

3. 	 "Requested Authority" means: 

a. 	 The Korean Authority to which a request is made under this MOU, where the 

Requesting Authority is the CFTC; or 

b. 	 The CFTC, where the Requesting Authority is a Korean Authority. 

4. 	 "Laws and Regulations" means: 

a. 	 For the CFTC, the Commodity Exchange Act ("CEA"), Dodd-Frank Wal l Street 

Reform and Consumer Protection Act, CFTC regulations, and other relevant 

requirements in the United States; and 

b. 	 For the Korean Authorities, the Financial Investment Business and Capital Markets 

Act, the Enforcement Decree ofthe Financial Investment Business and Capital 

Markets Act, the Regulations on Financial Investment Bus iness, the Business 

Guideline for Financial Market Infrastmctures, and other relevant laws, regulations or 

requirements in Korea. 

5. 	 "Person" means a natural person, unincorporated association, partnership , tmst, 

investment company, or corporation, and may be a Clearing Member, Clearing Participant, 

or Covered Clearing Organization. 
6. 	 "Covered Clearing Organ ization" means a central counterparty organized in either the 

United States or Korea that satisfies both of the following criteria: 

a. 	 A derivatives clearing organization ("DCO") that is, or that has applied to be, 

registered as such or that has been granted, or that has applied for, an exemption fro m 

registration under the CEA; and 

b. 	 A clearinghouse that is, or that has applied to be, authorized by the FSC and that serves 

or will serve as a central counterparty or a clearinghouse that has received, or that has 

applied for, approval by the FSC and that serves or will serve as a central counterparty. 

7. 	 "Clearing Member" means a member ofa Covered Clearing Organization that also serves 

as an intermediary through which market participants access the Covered Clearing 

Organization's services. 

8. 	 "Clearing Participant" means a participant of a Covered Clearing Organization that does 

not serve as an intermediary, but trades and clears only for its own account as principal. 

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

the possession, custody, and control of, and other information about, a Covered Clearing 

Organization related to its clearing activities. 

I 0. "Emergency Situation" means the occurrence ofan event that could materially impair the 

fmancial or operational condition ofa Covered Clearing Organization. 

11 . "On-Site Visit" means any regulatory visit as described in Article Five to the premises ofa 

Covered Clearing Organization for the p urposes ofongoing supervision and oversight, 

including the inspection of Books and Records. 

12. "Local Authority" means the Authority in whose jurisdiction a Covered Clearing 

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

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

14. "Governmental Entity" means: 

a. 	 Ifthe Requesting Authority is the CFTC, the U.S. Department of the Treasury or the 

U.S. Board ofGovernors of the Federal Reserve System; and 

b. 	 If the Requesting Authority is the FSC or the FSS, the Min istry of Strategy and 

Finance o r the Bank of Korea. 

ARTICLE TWO: GENERAL PROVISIONS 

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

connection with the supervision and oversight ofCovered Clearing Organizations. The 

cooperation and information sharing arrangements under this MOU should be interpreted 

and implemented in a manner that is permitted by, and consis tent with , the laws and other 

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legal or regulatory 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 informal consultations, 

supplemented as needed by more formal cooperation, including through mutual assistance 

in obtaining information related to Covered Clearing Organizations. The provisions of 

this MOU are intended to support both informal consultations and formal cooperation, as 

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

applicable laws. 

16. This MOU does not create any legally binding obligations, confer any rights, or modify 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 ofa request for assistance under this MOU. 

17. This MOU is not intended to limit or condition the discretion ofan Authority in any way in 

the discharge ofits regulatory responsibilities or to prejudice the individual 

responsibilities or autonomy of any 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 Covered Clearing Organizations, Clearing Members, or Clearing Participants but 

may be subject to regulatory requirements in the United States and in Korea. In particular, 

this MOU does not affect any right of any Authority to communicate with, conduct an 

On-Site Visit of, or obtain information or documents from any Person subject to its 

jurisdiction that is physically located in the territory of another Authority. 

18. This MOU is intended to complement but does not alter the terms and conditions of 

existing arrangements: 

a. 	 The IOSCO Multilateral Memorandum ofUnderstanding Concerning Consultation 

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

MMOU'') to which the CFTC, FSC, and FSS are signatories, which covers primarily 

information sharing in the context of enforcement matters. 

19. 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 in writing to the other Authorities. 

ARTICLE THREE: SCOPE OF SUPERVISORY CONSULTATION, COOPERATION, AND 

EXCHANGE OF INFORMATION 

General 

20. The Authorities recognize the importance of close communication concerning their 

supervision ofCovered Clearing Organizations 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 of Covered Clearing 

Organizations; and 

c. 	 Any other areas of mutual supervisory interest. 

21. The Authorities recognize in particular the importance of close cooperation in the event 

that a Covered Clearing Organization experiences, or is threatened by, a potential 

fmancial crisis or other Emergency Situation. 

22. 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 for registration or authorization, or exemption therefrom, by a 

Covered Clearing Organization that is authorized or registered in the other 

jurisdiction; 

b. 	 The ongoing supervision and oversight ofa Covered Clearing Organization including, 

for example, compliance with applicable statutory and regulatory requirements in 

either jurisdiction or with international standards; and 

c. 	 Regulatory or supervisory actions or approvals taken in relation to a Covered Clearing 

Organization that may impact the operations of the entity in the jurisdiction ofthe 

other Authority. 

Event-Triggered Notification 

23. As appropriate in the particular circumstances, the CFTC and each Korean Authority will 

endeavor to inform, respectively, the Korean Authorities or the CFTC 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 Covered Clearing Organization, including those that may 

affect the rules or procedures ofa Covered Clearing Organization; 

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

financial or operational stability of a Covered Clearing Organization including such 

events as a default or potential default of a Clearing Member or Clearing Participant; 

market or settlement bank difficulties that might adversely impact the Covered 

Clearing Organization; failure by a Covered Clearing Organization to satisfy any ofits 

requirements for continued registration, authorization, or exemption where that failure 

could have a material adverse effect in the other jurisdiction; or any known adverse 

material change in the ownership, operating environment, operations, financial 

resources, management, or systems and controls of a Covered Clearing Organization; 

c. 	 The status of efforts to address any material event that could adversely impact the 

fmancial or operational condition ofa Covered Clearing Organization, Clearing 

Member, or Clearing Participant; and 

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

revocation, suspension, or modification ofrelevant authorization or registration, or 

exemption therefrom, concerning a Covered Clearing Organization. 

24. The determination of what constitutes "significant impact", "material event", "adversely 

impact", "difficulties", "material adverse effect", "adverse material change", or 

"significant regulatory actions" for purposes ofParagraph 23 shall be left to the 

reasonable discretion ofthe relevant Authority that determines to notify the other 

Authority. 

25. Paragraphs 23 and 24 shall not preclude the Authorities from entering into any further 

arrangements relating to notification regarding specific financial or operational issues 

related to a Covered Clearing Organization. 

Request-Based Information Sharing 

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

Requested Authority intends to provide the Requesting Authority the fullest possible 

cooperation subject to the terms in this MOU in assisting the Requesting Authority's 

exercise ofits functions relating to a Covered Clearing Organization, including assistance 

in obtaining and intetpreting information that is relevant to ensuring compliance with the 

Laws and Regulations of the Requesting Authority and that is not otherwise available to 

the Requesting Authority. Such requests shall be made pursuant to Article Four of this 

MOU, and the Authorities anticipate that such requests will be made in a manner that is . 

consistent with the goal of minimizing administrative burdens. 

27. The information covered by Paragraph 26 includes: 

a. 	 Information relevant to the financial and operational condition of a Covered Clearing 

Organization's clearing activities including, for example, financial resources, risk 

management, and internal control procedures; 

b. 	 Relevant regulatory information and filings that a Covered Clearing Organization is 

required to submit to an Authority in relation to its clearing activities including, for 

example, interim and annual financial statements and event-specific notices; and 

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

reports, findings, or information contained in such reports regarding a Covered 

Clearing Organization's clearing activities. 

Periodic Meetings 

28. Representatives of the Authorities intend to meet periodically, as appropriate, to update 

each other on their respective functions and regulatory oversight programs and to disruss 

issues of common interest relating to the supervision ofCovered Clearing Organizations, 

including: contingency planning and crisis management, systemic risk concerns, default 

procedures, the adequacy ofexisting cooperative arrangements, and the possible 

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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 

29. To the extent possible, a request for information pursuant to Article Three 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 information sought by the Requesting Authority; 

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

c. 	 The 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 

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

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

transmitted 

30. In an Emergency Situation, the CFTC and the relevant Korean Authority or Authorities 

will endeavor to notify the other(s) as soon as possible of the Emergency Situation and 

communicate information as appropriate in the particular circumstances, taking into 

account all relevant factors, including the status of efforts 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 

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

compliance with, its Laws and Regulations, an Authority may need to conduct On-Site 

Visits to a Covered Clearing Organization physically located in the jurisdiction ofanother 

Authority. Each Authority will consult and work collaboratively with the other Authority 

in conducting an On-Site Visit. 

32. An On-Site Visit by an Authority will be conducted in accordance with the following 

procedure: 

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 o( the On-Site Visit. Other than in exceptional circumstances, the Visiting · 

Authority will notify the Local Authority prior to notifying the Covered Clearing 

Organization. 

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b. 	 The Local Authority will endeavor to share any relevant reports, or information 

contained therein, related to examinations it may have undertaken of the Covered 

Clearing Organization. 

c. 	 The Authorities intend to assist each other regarding On-Site Visits, including 

providing information 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 ofpublic and non-public Books and Records; and obtaining 

information from directors and senior management of a Covered Clearing 

Organization. 

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 joint On-Site 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 

the authorization, approval, registration, or exemption of the Covered Clearing 

Organization. 

ARTICLE SIX: PERMISSIBLE USES OF INFORMATION 

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

solely for the supervision and oversight of Covered Clearing Organizations pursuant to, 

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

34. The Authorities recognize that, while this MOU is not intended to enable the Authorities 

to gather information for enforcement purposes, the Authorities subsequently may want to 

use the non-public information provided pursuant to this MOU for enforcement purposes. 

With respect to information shared between the CFTC and one or both Korean Authorities, 

use ofnon-public information for enforcement purposes will be in accordance with the 

terms and conditions in Paragraph 10 of the IOSCO MMOU. 

35. Before using non-public information furnished under this MOU for any purpose other 

than those stated in Paragraphs 33 or 34, the Requesting Authority must frrst consult with 

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

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

for withholding approval of such use and the circumstances, if any, under which the 

intended use by the Requesting Authority might be allowed. 

36. 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 supervision and oversight of a 

Covered Clearing Organization and 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 terms of this MOU. 

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

directly from a Covered Clearing Organization, whether during an On-Site Visit or 

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

Authority pursuant to an information-sharing request pursuant to Article Four 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 

38. Except as provided in Paragraphs 39, 40, or 41, 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 

thisMOU. 

39. Each Korean Authority may share non-public information obtained from the CFTC under 

this MOU with the other Korean Authority so long as that other Korean Authority uses 

and treats the information in accordance with the terms of this MOU. 

40. As required by law, it may become necessary for a Requesting Authority to share 

non-public information obtained under this MOU with a Governmental Entity in its 

jurisdiction. In these circumstances and to the extent permitted by law: 

a. 	 The Requesting Authority intends to notify the Requested Authority; and 

b. 	 Prior to the Requesting Authority sharing the non-public information, the Requesting 

Authority will provide adequate assurances to the Requested Authority concerning the 

Governmental Entity's use and confidential treatment ofthe information, including, as 

necessary, assurances that: 

i. 	 The Governmental Entity has confirmed that it requires the information for a 

purpose within the scope of its jurisdiction; and 

ii. 	The information will not be shared by the Governmental Entity with other 

parties without getting the prior written consent of the Requested Authority. 

41. Except as provided in Paragraphs 39 and 40, 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 ofurgency of the request and respond in a timely manner. 

During an Emergency Situation, consent may be obtained in any form, including orally, 

provided such communication is confinned in writing 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. 

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

ofany legally enforceable demand for non-public information furnished under this MOU. 

When complying with the demand, the Requesting Authority intends to assert all 

appropriate legal exemptions or privileges with respect to such information as may be 

available. 

43. The Authorities intend that the sharing or disclosure of non-public information, including 

deliberative and consultative materials, such as written analysis, opinions, or 

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

Authority, pursuant to the terms of this MOU, will not constitute a waiver ofprivilege or 

confidentiality of such information. 

ARTICLE EIGHT: AMENDMENTS 

44. The Authorities will periodically as appropriate review the functioning and effectiveness 

ofthis MOU with a view, inter alia, to expanding or altering the scope or operation ofthis 

MOU should that be judged necessary. This MOU may be amended with the written 

consent ofthe Authorities referred to in Paragraph 1. 

ARTICLE NINE: EXECUTION OF MOU 

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

signed by the Authorities. 

ARTICLE TEN: TERMINATION 

46. 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 

terminate the MOU. If one Korean Authority terminates this MOU, the MOU shall 

remain effective between the CFTC and the remaining Korean Authority. If an Authority 

gives notice of termination, the relevant parties 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 such requests are fulfilled or 

the Requesting Authority withdraws such request(s) for assistance. In the event of 

termination ofthis MOU, information obtained under this MOU will continue to be 

treated in the manner described under Articles Six and Seven. 

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This MOU is executed in triplicate, this 2)J,. day of S, n"k..v-v. h 2015. 

I

Timoth}T(iMsad Yim~or!:~ Chairman Chairman 

U.S. Commodity Futures Trading Commission Korean Financial Services Commission 

Zhin, Woong-Seob 

Governor 

Korean Financial Supervisory Service 

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APPENDIX A 

CONTACT PERSONS 

In addition to the following contact information, the CFTC and the FSC and FSS will exchange 

confidential emergency contact telephone information. 

CFTC 

Jeffrey M. Bandman 

Acting Director, Division ofClearing and Risk 

Commodity Futures Trading Commission 

1155 2151 Street, N .W. 

Washington, DC 20581 

Phone: 1-202-418-5449 

Fax: 1-202-418-5547 

Email: jbandman@cftc.gov 

Alternate Contacts: 

Eileen A. Donovan 

Deputy Director, Clearing Policy, Division ofClearing and Risk 

Commodity Futures Trading Commission 

1155 21st Street, N.W. 

Washington, DC 20581 

Phone: 1-202-418-5096 

Fax: 1-202-418-5547 

Email: edonovan@cftc.gov 

Julie A. Mohr 

Deputy Director, Examinations 

Division ofClearing and Risk 

Commodity Futures Trading Commission 

525 W. Monroe Street, Suite 1100 

Chicago, IL 60661 

Phone: 1-312-596-0568 

Fax: 1-312-596-0713 

Email: jmohr@cftc.gov 

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FSC 

Tark, Yun Sung 

Director, International Finance Division 

Korean Financial Services Commission 

124 Sejong-dearo 

Junggu 

Seoul100-745 

Korea 

82-2-2156-9780 

fsc.ifd@gmail.com 

FSS 

Kim, Seong-beom 

Director General, International Cooperation Department 

Korea Financial Supervisory Service 

38 Y eoui-daero 

Youngdeungpo-gu 

Seoul 07321 

Korea 

82-2-3145-7890 

fssintl@fss.or.kr 

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