.... * * * * * 

MEMORANDUM 

of 

UNDERSTANDING 

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The United States United Kingdom 

Commodity Futures Trading Financial Services Authority 

Commission 

Concerning Consultation, Cooperation 

and the Exchange of Information 

Related to Market Oversight 
MEMORANDUM OF UNDERSTANDING CONCERNING CONSULATION, 

COOPERATION AND THE EXCHANGE OF INFORMATION RELATED TO 

MARKET OVERSIGHT 

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

operations of derivatives exchanges, the United States Commodity Futures Trading Commission 

("CFTC") and the United Kingdom Financial Services Authority ("FSA'') (collectively, "the 

Authorities''), have entered into this Memorandum of Understanding ("MOU") on the exchange 

of information related to cross-border oversight of US and UK derivatives exchanges.. The 

Authorities have developed this MOU in order to enhance their respective capabilities to address 

potential abusive or manipulative trading practices that may involve trading on UK and US 

derivatives exchanges. 

ARTICLE ONE: DEFINITIONS 

For purposes of this MOU: 

1. "Authority" means the CFTC or FSA: 

a) "Requested Authority" means the Authority to whom a request is ~ade under this 

MOU; and 

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

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2. "Exchange'' means: 

a) a US Exchange that is designated as a contract market by the CFfC and that has 

been recognized by the FSA as an overseas investment exchange (RO IE"); and 

b) a UK Exchange that has been recognized as an investment exchange by the FSA 

and that operates in the United States pursuant to a CFfC procedure that does not 

require designation as a US contract market. 

3. "Emergency Situation" means an on-going or threatened situation such as one that may 

impair the price discovery function or market integrity of an Exchange. 

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

investment company or corporation. 

ARTICLE TWO: GENERAL PROVISIONS 

5. This MOU is a statement of intent to consult, cooperate and exchange information in 

connection with the routine surveillance of Exchanges, in a manner consistent with, and 

as permitted by, the laws and requirements that govern the Authorities. ~e Authorities 

contemplate that cooperation would be achieved primarily through ongoing, informal, 

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oral consultations, supplemented by more in-depth information sharing as implemented 

by the Authorities to address specific market surveillance concerns. 

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

supersede domestic laws. This MOU does not confer upon any person or organization 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. 

7. 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 the 

right of any Authority to communicate with, or obtain information or documents from, 

any Person subject to its jurisdiction that is located in the territory of the other Authority. 

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

following existing arrangements and statements of policy concerning cooperation and 

information sharing between the Authorities: 

a) The Memorandum of Understanding on Mutual Assistance and the Exchange of 

Information between (among others) the CFTC and FSA (September 25, 1991 ), as 

amended) (the "UK/US MOU"), which covers primarily information sharing in 

the context of enforcement matters; 

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b) The IOSCO Multilateral Memorand~m of Understanding Concerning 

Consultation and Cooperation and the Exchange of Information. (the "IOSCO 

MMOU") to which the CFfC and FSA are signatories, which also covers 

primarily information sharing in the context of enforcement matters; 

c) The Declaration on Cooperation and Supervision of International Futures 

Markets and Clearing Organizations, (as amended March 1998), whereby certain 

agreed triggering events affecting an exchange member's financial resources or 

positions, unusually large price movements or relationships on a market, or a 

reasonable suspicion of abusive activity prompts information sharing; 

d) The Tokyo Communique on Supervision of Commodity Futures Markets (1997), to 

which the CFfC and FSA are signatories, which in its Guidance on Components 

of Market Surveillance and Information Sharing enumerates the types of 

information that market authorities should be prepared to share for routine and for 

cause market surveillance purposes; and 

e) The Arrangement on Warehouse Information (2000), which covers information 

sharing regarding deliverable commodities that are common to the US and UK for 

surveillance and enforcement purposes. 

9. The Authorities intend in particular, and to the maximum extent possible, that the 

cooperation and information sharing arrangements under this MOU should be 

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implemented in a manner which is compatible with the obligations and commitments 

which an Authority may have under its respective statutes and regulations. 

10. The Authorities intend to review periodically the functioning and effectiveness of this 

arrangement between the FSA and CFfC with a view, among other things, to expanding 

or altering the scope of operation of this MOU, or altering the MOU to take into 

consideration significant change in market or business conditions, should that be judged 

necessary by the Authorities. 

11. To facilitate cooperation and communication 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 INFORMATlON 

. Ongoing consultations 

12. The Authorities recognize the importance of close communication concerning the crossborder operations of Exchanges, and intend to consult regularly regarding general 

supervisory developments and issues relevant to the cross-border operations of those 

Exchanges. 

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13. Each Authority endeavors to inform the other Authority of activities taking place on an 

Exchange in the Authority's jurisdiction that may assist the other Authority with 

surveillance of manipulative or abusive trading practices. 

Information to be Shared 

14. To the extent necessary to supplement periodic and ad hoc oral consultations each 

Authority intends to provide the other Authority the fullest cooperation in assisting with 

the identification of manipulative or abusive trading practices. Both Authorities 

·recognize that there may be situations where information should be shared related to 

exchanges that are not necessarily duaiiy authorized as defined in Paragraph 2 of this 

MOU. Without limiting the scope of possible cooperation, to the extent practicable and 

as appropriate in the particular circumstances, each Authority intends to provide, upon 

request, the following types of information: 

a) terms and conditions of each derivatives contract or instrument; 

b) details ofan Exchange's market regulations such as position limits, reporting 

obligations, and price limits; 

c) details of delivery rules and procedures or cash settlement provisio!ls; 

d) general details about market information collected and analyzed; 

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e) details of designated delivery facilities, such as warehouses; 

f) details of traders' positions; 

g) details of large positions held by members and users of the exchange in respect of 

on-exchange, related OTC and cash positions; 

f) inventory levels and locations of delivery stocks; 

g) audit trail data; and 

h) additional margin calls. 

15. It is anticipated that such requests will relate to information that is not otherwise 

available to the Requesting Authority. 

Periodic monitoring 

16. The Authorities recognize that there may be deterrent value in instituting periodic 

monitoring of trading with cross-border implications to identify whether ~ected 

abusive market activity is occurring. Because the circumstances that may give rise to 

manipulative or abusive trading practices may vary, the Authorities intend to institute 

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programs periodically to share information to assist in the detection of manipulative or 

abusive trading practices. 

17. The Authorities may, as appropriate, institute a program of a specified scope and duration 

to share relevant information for the purpose of detecting manipulative or abusive trading 

practices. 

ARTICLE FOUR: EXECUTION OF REQUESTS FOR ASSISTANCE 

18. To the extent possible, a request for information pursuant to Article Three should be 

made in writing, 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 of the purpose for which the information is sought; and 

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

19. For supervisory purposes, the Authorities may request receipt of the information on a 

routine basis. The duration and frequency of sharing information on a routine basis is 

determined by mutual understanding of the Authorities. 

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20. Prior to making a Request, an Authority should use reasonable efforts, consistent with 

the urgency of the Request, to obtain through other means any of the information 

referred to in Article Three that is publicly and readily available. 

21. Notwithstanding the above, the Authorities understand that publicly available 

information may be requested under this Arrangement, and each Authority intends to 

assist the other Authority to obtain such publicly available information expeditiously. 

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

Emergency Situation and communicate information to the other as would be 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 ora1ly, provided such 

communication is confirmed in writing. 

ARTICLE FIVE: PERMISSIBLE USES AND CONFIDENTIALITY OF INFORMATION 

23. Except for disclosures in accordance with this MOU, 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 request, and any other matters. arising under 

this MOU. ! 

_f 

24. Information received in response to a Request is intended, consistent with applicable 

law, to be used by the Requesting Authority solely for the purpose of enabling or 

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assisting it to exercise its regulatory oversight and supervisory functions. 

25. As mentioned above, this MOU is intended to complement, but not alter in any way, 

either the US/UK MOU or the IOSCO MMOU. The Authorities recognize that the 

purpose of this MOU is not primarily to obtain information for enforcement purposes, 

although the Authorities subsequently may want to use the information obtained under 

this MOU for enforcement purposes. Use of information for enforcement purposes will 

be in accordance with the terms and conditions in Part V, Paragraph 16 of the US/UK 

MOU and Paragraph 10 of the IOSCO MMOU. 

26. 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. 

27. The Authorities intend that the sharing or disclosure of such non-public information, 

including but not limited to deliberative and consultative materials, pursuant to the terms 

of this MOU, will not constitute a waiver of privilege or confidentiality of such 

information. 

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ARTICLE SIX: TERMINATION 

28. 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 

tenninate its cooperation under 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 Five. 

' 

This MOU is executed in duplicate in London, England, this 17th day of November 2006. 

Reuben Jeffery III, Sir Callum McCarthy, Chairman 

United States Commodity Futures United Kingdom Financial Services Authority 

Trading Commission 

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APPENDIX "A" 

CONTACT OFFICERS 

US Commodity Futures Trading Commission 

1155 21st Street, N.W. 

Washington, DC 20581 

USA 

Director 

Division of Market Oversight 

Tel: 202-418-5275 

Fax:202-418-5527 

********************************* 

UK Financial Services Authority 

25 The North Colonnade 

Canary Wharf 

London E 14 5HS 

UK 

Head of Department 

Markets Division 

Tel: 44 20 7066 5906 

Fax: 44 20 7066 5907 

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