MEMORANDUM OF UNDERSTANDING CONCERNING COOPERATION AND THE 

EXCHANGE OF INFORMATION RELATED TO THE SUPERVISION OF CROSSBORDER CLEARING ORGANIZATIONS. 

This Memorandum of Understanding ("MOU") establishes a framework pursuant to which the 

United States Commodity Futures Trading Commission ("CFTC") and the United Kingdom 

Financial Services Authority ("FSA") (collectively "the Authorities") express their willingness to 

cooperate with each other in the interest of fulfilling their statutory functions. 

ARTICLE ONE: DEFINITIONS 

For purposes of this MOU: 

1. "Authority" means the CFTC or the FSA: 

a) "Requested Authority" means the Authority to whom a request is made 

under this MOU; and 

b) "Requesting Authority" means the Authority making a request under this 

MOU. 

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

of, and other information about, a Covered Clearing Organization. 

3. "Covered Clearing Organization" means any organization that falls within either 

of the following categories: 

1. Category 1 -An organization that satisfies both of the following criteria 

under this category: 

a) A derivatives clearing organization registered as such under the 

Commodity Exchange Act ("DCO") or a clearing organization that 

is the subject of an order issued by the CFTC pursuant to Section 

409(b)(3) ofthe Federal Deposit Insurance Corporation 

Improvement Act 1991; and 

b) A recognised clearing house or recognised investment exchange 

(that provides clearing services in relation to transactions 

conducted on that exchange) under the Financial Services and 

Markets Act 2000 ("FSMA"), which is based in the United 

Kingdom. 

n. Category 2 - An organization that satisfies both of the following criteria 

·under this category: 

a) ADCO; and 

b) A recognised overseas clearing house under Section 292 of FSMA, 

which is based in the United States of America. 
4. "Emergency Situation" means the occurrence of an event that could materially 

impair the financial or operational condition of a Covered Clearing 

Organization. 

5. "Host Authority" means the Authority in whose jurisdiction a Covered Clearing 

Organization is located. 

6. "Inspecting Authority" means the Authority performing an On-Site Visit. 

7. "National Governmental Entity" means: 

a) If the Requesting Authority is the CFTC, the U.S. Department of the 

Treasury or the U.S. Board of Governors of the Federal Reserve System; 

and 

b) If the Requesting Authority is the FSA, Her Majesty's Treasury or the 

Bank of England. 

8. "On-Site Visit" means: 

a) In the case of an On-Site Visit conducted by the CFTC as described in 

Paragraphs 24-25, a regulatory visit to the premises of a Covered Clearing 

Organization in the United Kingdom; and 

b) In the case of an On-Site Visit conducted by the FSA as described in 

Paragraphs 24-25, a regulatory visit to the premises of a Covered Clearing 

Organization in the United States. 

9. "Person" means a natural person, unincorporated association, partnership, trust, 

investment company, or corporation. 

ARTICLE TWO: GENERAL PROVISIONS 

10. This MOU is a statement of intent to consult, cooperate and exchange 

information in connection with each of the Authorities' functions relating to 

Covered Clearing Organizations. The cooperation and information sharing 

arrangements under this MOU should be interpreted and implemented in a 

manner that is permitted by, and consistent with, the laws and requirements that 

govern each Authority, including relevant government policies and guidelines, 

and obligations and commitments to other regulatory authorities. The 

Authorities anticipate that cooperation will be primarily achieved through 

ongoing informal consultations, supplemented by more in-depth, ad hoc formal 

cooperation. The provisions ofthis MOU are not intended to discourage or 

hinder such informal communication. 

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11. 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. 

12. 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 responsibilities or autonomy of any Authority. This MOU does not 

limit an Authority to taking solely those measures described herein in 

fulfillment of its supervisory functions. 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 located in the territory of the other Authority. 

13. This MOU is intended to complement, but does not alter, the terms and 

conditions of the following existing arrangements concerning cooperation in 

securities and futures matters: 

1. The Memorandum of Understanding on Mutual Assistance and the 

Exchange of Information between (among others) the CFTC and FSA 

(September 1991) ("US-UK MOU"), which covers primarily information 

sharing in the context of enforcement matters; 

11. The IOSCO Multilateral Memorandum of Understanding Concerning 

Consultation and Cooperation and the Exchange of Information (October 

2003) ("MMOU") to which the CFTC and FSA are signatories, which also 

covers primarily information sharing in the context of enforcement 

matters; 

111. The Declaration on Cooperation and Supervision of International Futures 

Markets and Clearing Organizations (as amended March 1998), to which 

the CFTC and FSA are signatories; and 

IV. The Memorandum of Understanding Concerning Consultation, 

Cooperation and the Exchange of Information Related to Market 

Oversight between the CFTC and FSA (November 2006). 

However, this MOU supersedes the Supplemental Bilateral Side letter dated May 24, 

1999 between the .FSA and CFTC to the US-UK MOU 

14. The Authorities intend periodically to review the functioning and effectiveness 

of cooperation arrangements between the FSA and CFTC with a view, inter 

alia, to expanding or altering the scope or operation of this MOU should that be 

judged necessary. 

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

contact persons as set forth in Appendix A. 

ARTICLE THREE: SCOPE OF SUPERVISORY CONSULTATION, 

COOPERATION AND EXCHANGE OF INFORMATION 

16. The Authorities recognize the importance of close communication concerning 

their supervision of Covered Clearing Organizations, and intend to consult 

regularly, as necessary, regarding ·general supervisory developments and issues 

relevant to the operations, activities and regulation of such Covered Clearing 

Organizations. 

17. 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 financial crisis or other emergency situation. 

Event-Triggered Notification 

18. As appropriate in the particular circumstances, each Authority endeavors to 

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

a) Pending regulatory changes or proposed regulatory actions with regard to a 

Covered Clearing Organization that may have a significant impact on the 

operations, activities, or reputation of a Covered Clearing Organization, 

including changes in default rules or procedures; and 

b) Any material event that could adversely impact the financial or operational 

stability of a Covered Clearing Organization. Such events include a default 

or potential default of a clearing member firm, market or settlement bank 

emergencies that might adversely impact the Covered Clearing 

Organization, its failure to satisfy any of its requirements for continued 

recognition or registration, or any known material changes in the operating 

environment, operations, management, or systems and controls that may 

adversely impact its operations or financial stability; and 

c) The status of efforts to address any material financial or operating 

difficulties experienced by a Covered Clearing Organization or clearing 

member firm. 

19. The determination of what constitutes a "significant impact," "material event," 

"adverse impact," or "material change" shall be left to the reasonable discretion 

of the relevant Authority that determines to notify the other Authority. 

20. The above is without prejudice to any arrangements relating to specific 

prudential issues. 

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Request-Based Information Sharing 

21. To the extent necessary to supplement informal consultations, upon written 

request, each Authority intends to provide to the other Authority the fullest 

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

Authority's exercise of its functions relating to a Covered Clearing Organization 

and ensuring compliance with the laws or regulations of the Requesting 

Authority. The Authorities anticipate that such requests will be made in a 

manner that is consistent with the goal of minimizing administrative burdens, 

and will relate to information that is not otherwise readily available to the 

Requesting Authority. 

22. The assistance covered by Paragraph 21 includes, where appropriate, providing 

information based upon documents held in the files of the Requested Authority 

that is relevant to the Requesting Authority's functions relating to the operations 

or activities of a Covered Clearing Organization. The Requested Authority will 

provide maximum assistance, to the extent necessary, in interpreting such 

information. Such information includes, without limitation: 

1. Information relevant to the financial and operational condition of a 

Covered Clearing Organization including, for example, interim and annual 

financial statements, information drawn from reports or filings, early 

warning notices that a Covered Clearing Organization is required to 

submit to an Authority; and 

n. Copies of regulatory reports (including examination reports) and filings, or 

information contained therein, that may be relevant to the Requesting 

Authority's function relating to a Covered Clearing Organization. 

Periodic Meetings 

23. Representatives of the CFTC and FSA will meet periodically, to update each 

other on their respective functions and regulatory oversight programs and to 

discuss issues of common interest relating to the supervision of Covered 

Clearing Organizations, including: contingency planning and crisis 

management, the adequacy of existing cooperative arrangements, any systemic 

risk concerns, default procedures, and the possible improvement of cooperation 

and coordination among the Authorities. Such meetings may be conducted over 

conference call or on a face-to-face basis, as judged appropriate by the 

Authorities. 

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ARTICLE FOUR: ON-SITE VISITS 

24. In fulfilling their regulatory functions relating to Covered Clearing 

Organizations, the CFTC may need to conduct On-Site Visits of such 

organizations located in the United Kingdom with respect to their operations 

and activities as Covered Clearing Organizations and the FSA may need to 

conduct On-Site Visits of such organizations located in the United States with 

respect to their operations and activities as Covered Clearing Organizations. 

25. It is anticipated that an On-Site Visit by an Authority will be conducted in 

accordance with the following procedure: 

a) The Inspecting Authority will notify the Host Authority of its intent to 

conduct an On-Site Visit and the intended time frame for, and the scope of, 

the On-Site Visit. Other than in exceptional circumstances, the Inspecting 

Authority will notifY the Host Authority prior to notifying the Covered 

Clearing Organization. 

b) Having due regard to each other's supervisory activities or functions, the 

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

providing information 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 Covered Clearing 

Organization. Following consultation with the Host Authority, the 

Inspecting Authority will use the information provided in informing its 

decisions concerning both the scope of, and the continued necessity for, the 

On-Site Visit. 

c) The Host Authority may, in its discretion, accompany the Inspecting 

Authority during the On-Site Visit and assist in the On-Site Visit, or 

conduct joint inspections where appropriate. 

ARTICLE FIVE: EXECUTION OF REQUESTS FOR ASSISTANCE 

26. To the extent possible, a request for written information pursuant to Article 

Three should be made in writing, and addressed to the relevant contact person in 

Appendix A. To expedite requests for assistance, requests may be sent by 

electronic mail. 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 and the 

purpose for which the information is sought; and 

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c) The desired time period for reply and, where appropriate, the urgency 

thereof. 

27. In Emergency Situations, the Authorities will endeavor to notify each other of 

the Emergency Situation and communicate information to the other as 

appropriate in the particular circumstances, taking into account all relevant 

factors, including the status of efforts to address the Emergency Situation. 

During Emergency Situations, requests for information may be made in any 

form, including orally, provided such communication is confirmed in writing. 

ARTICLE SIX: PERMISSIBLE USES AND CONFIDENTIALITY OF 

INFORMATION 

28. Except for disclosures in accordance with this MOU, including permissible uses 

of information under this Article, each Authority intends to keep confidential to 

the extent permitted by law information shared under this MOU, requests made 

under this MOU, the contents of such requests, and any other matters arising 

under this MOU. 

29. Subject to Paragraphs 30, 32, 33, 34, 35 and 36 below, the Requesting Authority 

may use non-public information obtained under this MOU solely for exercising 

its functions in relation to Covered Clearing Organizations and seeking to 

ensure compliance with the laws or regulations of the Requesting Authority. 

30. In cases where a Requesting Authority seeks to onward share non-public 

information obtained pursuant to this MOU with a third securities, futures, 

insurance, banking or other regulatory authority in its jurisdiction (third 

authority), the Requesting Authority may only do so provided that it is for the 

purpose of its exercise of its regulatory function and undertakes to consult with 

the Requested Authority prior to providing the information to the third authority 

and: 

a) Provides assurances to the Requested Authority that the third authority has 

confirmed that it requires the non-public information for a relevant 

supervisory purpose related to a Covered Clearing Organization; and 

b) Obtains confirmation from the Requested Authority that the third authority 

has in place an information sharing arrangement with the Requested 

Authority related to supervisory matters, which governs the use and 

confidentiality of any non-public information shared under such 

arrangement. 

31. If the conditions described in (a) and (b) of Paragraph 3 0 are not met, the 

Requesting Authority must obtain consent from the Requested Authority prior 

to providing non-public information obtained under this MOU to a third 

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authority. The Requested Authority will take into account the level of urgency 

of the request and respond in a timely manner. 

32. If an Authority receives, via a third party, information related to the Authority's 

functions relating to a Covered Clearing Organization provided by the other 

Authority, the first Authority will treat the information in accordance with the 

terms ofthis MOU. · 

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

other than those stated in Paragraphs 29 and 34, the Requesting Authority must 

first inform and gain the approval of the Requested Authority of the intended 

use. As necessary, the Authorities will consult to discuss the reasons for any 

denial by the Requested Authority of such use and the circumstances under 

which such use might be allowed. 

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

information for enforcement purposes, the Authorities subsequently may want 

to use the information for law enforcement. Use of information for enforcement 

purposes will be in accordance with the terms and conditions in Part V, 

Paragraph 16 ofthe US-UK MOU and Paragraph 10 ofthe IOSCO MMOU. It 

is anticipated that the Requesting Authority would use best endeavors to notify 

the Requested Authority before making use of the information provided for 

enforcement purposes. 

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

Authority of any legally enforceable demand for non-public information 

furnished under this MOU. Prior to compliance with the demand, the 

Requesting Authority intends to assert all appropriate legal exemptions or 

privileges with respect to such information as may be available. 

36. In extraordinary circumstances, it may become necessary for a Requesting 

Authority to share information obtained under this MOU with other National 

Governmental Entities. 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 passing on the information, the Requested 

Authority will receive adequate assurances concerning the National 

Governmental Entity's use and confidential treatment ofthe information, 

including, as necessary, assurances that the information will not be shared 

with other parties without getting the prior consent of the Requested 

Authority. 

37. The Authorities intend that the sharing or the disclosure of non-public 

information, including but not limited to deliberative and consultative materials, 

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

confidentiality of such information. 

38. 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 OnSite Visit or otherwise. However, where that information is provided to the 

Requesting Authority pursuant to an information-sharing request under this 

MOU, the restrictions in this MOU apply to the use of the information by that 

Requesting Authority. 

ARTICLE SEVEN: TERMINATION 

39. 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 either Authority gives such notice, 

cooperation will continue with respect to all requests for assistance that were 

made under the MOU before the effective date of notification until the 

Requesting Authority terminates the matter for which assistance was requested. 

In the event of termination of this MOU, information obtained under this MOU 

will continue to be treated in the manner prescribed under Article Six. 

This MOU is executed in duplicate, this 

Hectorfl~M Chief Executive Officer 

U.S Commodity Futures Trading Commission U.K. Financial Services Authority 

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APPENDIX A 

CONTACT PERSONS 

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

confidential emergency contact telephone information. 

FSA 

Sarah Harris 

Manager, Clearing and Settlement 

Market Infrastructure & Policy Department 

25 The North Colonnade 

Canary Wharf 

London 

1314 5HS 

United Kingdom 

Phone: +44 (0) 20 7066 9306 

Fax: +44 (0) 20 7066 9307 

Email: sarah.harris@fsa. gov. uk 

CFTC 

Ananda Radhakrishnan 

Director, Division of Clearing and Intermediary Oversight 

Commodity Futures Trading Commission 

1155 21st Street, N.W. 

Washington, DC 

Phone: 01-202-418-5188 

Fax: 01-202-418-5547 

Email: aradhakrishnan@cftc.gov 

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