FINANCIAL INFORMATION 

SHARING MEMORANDUM OF UNDERSTANDING 

ARTICLE I: GENERAL 

The United States Commodity Futures Trading Commission 

("CFTC"), an independent regulatory agency of the u.s. government, the Commission des valeurs mobilieres du Quebec ('"CVMQ"), a 

provincial administrative agency established under the Quebec 

Securities Act {"QSA"), the Ontario Securities Commission 

( "OSC"), a designated agency established and vested with statutory powers to regulate the futures markets under the Commodity 

Futures Act of the provincial government of Ontario ("CFA"), the 

National Futures Association ( "NFA"), a futures association registered under section 17 of the Commodity Exchange Act ("CEA"), 

The Montreal Exchange and The Toronto Futures Exchange ( "TFE") 1 

recognize the increasing international activity in the futures 

markets, the increasing number of firms operating in more than 

one jurisdiction directly or through affiliates, and the 

corresponding need for mutual cooperation between the relevant 

authorities to conduct an effective financial compliance and risk 

assessment program. Reference also is made to the Orders of the 

CFTC of March 14, 1989 and March 16, 1990 granting exemptions to 

certain brokers, referred to as Designated Futures Brokers 

herein, pursuant to rule 30.10 promulgated under the CEA. Those~ 

Orders are based upon, among other things, the 
mechanisms for sharing information with the CFTC to ensure access 

on an "as needed" basis to, without limitation, data on a firm's 

standing to do business and its financial condition. 

For these reasons, we have reached the following 

understanding with respect to the sharing and reporting Of 

financial information regarding Designated Futures Brokers and 

Key Related Firms, as defined in Article II. 

ARTICLE II: DEFINITIONS 

1. For purposes of this Financial Information Sharing 

Memorandum of Understanding ("FISMOU"): 

(a) "Futures Brokers" means those firms engaged in an agency 

futures business who are members of The Montreal Exchange 

or the TFE, and who are regulated by the CVMQ or the OSC. 

(b) "Designated Futures Brokers" means those futures brokers 

that have been granted relief pursuant to the procedures 

set forth in the Orders issued to The Montreal Exchange 

on March 14, 1989, and/or to the TFE on March 16, 1990 

under rule 30.10 promulgated under the CEA and identified 

in Appendix A hereof as may be amended from time to time. 

(c) "Futures Commission Merchant" or "FCM" means a futures 

commission merchant that is registered as such under the 

CEA and that conducts business in the United States. 

(d) "Key Related Firms" means: 

(i) those Futures Brokers who are directly or 

indirectly controlling, controlled by, or under 

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common control with, an FCM including, without 

limitation, subsidiaries or companies with a 

common parent or holding company~ or 

(ii) those FCMs who are directly or indirectly 

controlling, controlled by, or under common 

control with, a Futures Broker including, without 

limitation, subsidiaries or companies with a 

common parent or holding company; 

that are, to the best knowledge and belief of The 

Montreal Exchange, TFE or the relevant Canadian or U.S. 

Regulatory Authority, identified as such (including as to 

the nature of that relationship) and listed in Appendices 

B, C and D hereof as may be amended from time to time. 

(e) "Joint Regulatory Financial Questionnaire and Report" or 

"JRFQ" means the annual audited financial report filed at 

year end or the unaudited financial report filed at the 

request of a Canadian SRO by a Futures Broker pursuant to 

TFE or The Montreal Exchange by-laws. 

(f) "Monthly Financial Reports" means the unaudited financial 

statement and report filed on a monthly basis by a 

Futures Broker pursuant to TFE or The Montreal Exchange 

by-laws. 

(g) "Form 1-FR-FCM" means the financial report filed pursuant 

to Rule 1.10 under the CEA by an FCM on at least a #IV 

1\ :}c9 

(l}9 ~rri 

semiannual basis with its Designated U.S. SRO. 

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I 
(h) "Joint Audit Committee" means the committee of 

representatives of all U.S. SROs which was established to 

coordinate audit and financial surveillance plans, 

policies and procedures, particularly with respect to 

FCMs that are members of more than one U.S. SRO.-

(i} "Rule 1.12 Telegram" means the telegraphic or written 

notice filed by an FCM with its Designated U.S. SRO and 

( j ) 

the CFTC pursuant to Rule 1.12 promulgated under the CEA 

if (i} the adjusted net capital of an FCM falls below the 

minimum required by an applicable capital rule, (ii) the 

adjusted net capital of an FCM falls below 150 percent of 

the minimum required by an applicable capital rule, (iii) 

the books and records of an FCM are not current, (iv) the 

accounting system of an FCM, its accounting controls, 

procedures for safeguarding customer and firm assets or 

certain other practices and procedures specified in Rule 

1.16(d)(l) promulgated under the CEA, are affected by a 

material inadequacy, as defined in Rule 1.16(d)(2) 

promulgated under the CEA, (v) the accounts carried by an 

FCM include an account which is undermargined by an 

amount which exceeds the firm's adjusted net capital, or 

(vi) any other event occurs for which Rule 1.12 requires 

telegraphic or written notice to an FCM's Designated U.S. 

SRO and the CFTC. 

"U.S. Self-Regulatory Organization" or ··u.s. SRO" means ~ 

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;1/J ~~ 
NFA or any other self-regulatory organization as defined 

in Rule 1.3(ee) promulgated under the CEA. 

(k) "Designated U.S. Self-Regulatory Organization" or "Designated u.s. SRO" means a u.s. SRO that has primary 

responsibility for examining a member FCM for compliance 

with minimum financial and related reporting requirements 

under CFTC oversight {i) pursuant to Section 4f{2) of the 

CEA and Rule 1.52 promulgated thereunder, and in 

accordance with a joint audit plan approved by the CFTC 

under that rule, or (ii) because the member FCM is a 

member solely of that U.S. SRO. 

(1) "Canadian Self-Regulatory Organization" or "Canadian SRO" 

means The Alberta Stock Exchange, The Montreal Exchange, 

The Toronto Stock Exchange, The Toronto Futures Exchange, 

the Vancouver Stock Exchange and the Investment Dealers 

Association of Canada. 

(m) "Designated Canadian Self-Regulatory Organization" or 

"Designated Canadian SRO" means a Canadian SRO that has 

primary responsibility for examining a Futures Broker 

which is a member of more than one Canadian SRO or 

because the Futures Broker is a member solely of that 

SRO. 

(n) "Canadian Regulatory Authority" means the Commission des 

valeurs mobilieres du Quebec or the Ontario Securities 

Commission, as appropriate. 

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(o) "United States Regulatory Authority" means the CFTC or 

NFA, as appropriate. 

(p) "Requested Authority" means the party (CVMQ, OSC or CFTC) 

to whom a request is made under Part B of Article III of 

this FISMOU. 

(q) "Requesting Authority" means the party (CVMQ, OSC or 

CFTC) making a request under Part B of Article III of 

this FISMOU. 

(r) "Laws, Rules and Regulations" means the provisions of the 

laws of Canada or the United States, a rule or regulation 

adopted thereunder, or an order issued thereunder by a 

relevant Canadian Regulatory Authority, a relevant United 

States Regulatory Authority, a Canadian SRO, or a U.S. 

SRO concerning the financial condition of persons 

transacting business in futures or option contracts or 

markets. 

ARTICLE III: EXCHANGE OF INFORMATION 

A. NOTIFICATION OF INFORMATION 

1. The Montreal Exchange or the TFE, as appropriate, will 

provide to the CFTC, commencing with the first filing due after 

the effective date of this FISMOU, and as promptly as practicable 

thereafter after receipt of the relevant report or notification, 

the following information with respect to each of its members who 

are Designated Futures Brokers: fUll/ 

(a) On an annual basis, the most recent annual audited JRFQ ~. 

-6- )J{ ~ 

1/;Rtflt 
and the most recent available Monthly Financial Report 

required under the rules of the Designated Canadian SRO. 

The Montreal Exchange or the TFE, as appropriate, will 

represent that it, or if it is not the Designated 

Canadian SRO for the Designated Futures Broker, will 

represent that such Designated Canadian SRO, has reviewed 

the filing and that, based solely on its review or that 

of the Designated Canadian SRO, as appropriate, of the 

information in that filing, there is no reason to believe 

(or there is reason to believe) that there exists a 

violation of the financial requirements of the Designated 

Canadian SRO; 

(b) Any special financial report required at the request of a 

Canadian SRO which reports transactions or conditions 

that could, or do, materially and adversely affect, 

directly or indirectly, the financial standing of the 

Designated Futures Broker; 

(c) Details of any notifications received under the rules of 

the Designated Canadian SRO which report transactions or 

conditions that could, or do, materially and adversely 

affect, directly or indirectly, the financial standing of 

the Designated Futures Broker, including reports of 

failure to meet financial requirements, deterioration of 

capital, transfers of capital, internal control JZt~ 

•.. ,., ....... •"' '"'':·: .. """"'"'" ....... ·:;:;'··"~ 

#~ 
2. The Montreal Exchange or the TFE, as appropriate, will 

provide the CFTC, simultaneously with any application, subsequent 

to the effective date hereof, by a Futures Broker to become a 

Designated Futures Broker, with the information described in 

preceding paragraph l(a) and (b) of this Article III. 

3. If, in the case of a Designated Futures Broker, The 

Montreal Exchange or the TFE, or in the case of a Key Related 

Firm, the relevant Canadian or relevant United States Regulatory 

Authority becomes aware of any information which in its 

respective judgment materially and adversely affects the 

financial or operational viability of such Designated Futures 

Broker and/or Key Related Firm, as appropriate, it will: 

(a) In the case of The Montreal Exchange, the TFE or the 

relevant Canadian Regulatory Authority, notify the CFTC 

and provide: 

(i) the information which, in the judgment of The 

Montreal Exchange, the TFE or the relevant 

Canadian Regulatory Authority, materially and 

adversely affects the financial or operational 

viability of the Designated Futures Broker and/or 

Key Related Firm; 

(ii) copies of the Designated Futures Broker's and/or 

(iii) 

Key Related Firm's most recent audited and any 

subsequent unaudited JRFQ; 

copies of the Monthly Financial Reports for the 

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preceding six-month period; 

(iv) details of any notifications received during the 

last six months by The Montreal Exchange, the TFE 

or the relevant Canadian Regulatory Authority and 

not already provided pursuant to any other 

provision of this FISMOU which report 

transactions or conditions that could, or do, 

materially and adversely affect, directly or 

indirectly, the financial standing of the 

Designated Futures Broker and/or Key Related 

Firm, including reports of failure to meet 

financial requirements, deterioration of capital, 

transfers of capital, internal control 

inadequacies, and failure to maintain current 

records; and 

(v) any other information which The Montreal 

Exchange, the TFE or the relevant Canadian 

Regulatory Authority may have in its possession 

which it deems relevant in its sole discretion, 

including without limitation, information related 

to intercompany loans or guarantee arrangements, 

customer omnibus accounts, or the types of 

trading activity engaged in by the Designated 

Futures Broker and/or Key Related Firme 

In the case of the relevant United States Regulatory 

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Authority, notify the relevant Canadian Regulatory 

Authority and provide: 

(i) the information which, in the judgment of the 

relevant United States Regulatory Authority, 

materially and adversely affects the financial or 

operational viability of the Key Related Firm; 

(ii) copies of the most recent audited Form 1-FR-FCM 

filed as of the fiscal year-end by the Key 

Related Firm and copies of any subsequent 

unaudited Form 1-FR-FCM filed by such Firm; 

(iii) copies of the Key Related Firm's Rule 1.12 

telegrams, if relevant for the preceding six 

months, if any; 

{iv) notification if the Key Related Firm is 

classified as high risk under the Joint Audit 

Committee criteria; and 

(v) any other information which the relevant United 

States Regulatory Authority may have in its 

possession which it deems relevant in its sole 

discretion, including without limitation, 

information related to intercompany loans or 

guarantee arrangements, customer omnibus 

accounts, or the types of trading activity 

engaged in by the Key Related Firm. 

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B. REQUESTS FOR INFORMATION 

1. In order to assist each other in their conduct of 

effective financial compliance and risk assessment with respect 

to Designated Futures Brokers and Key Related Firms, the CVMQ and 

OSC, and the CFTC will provide to the other, upon request, relevant financial information which may include, without 

limitation: 

(a) Documents filed with the relevant Canadian or United 

States Regulatory Authorities or Canadian or U.S. SROs, 

such as financial reports, notices which report 

conditions that could, or do, materially and adversely 

affect the financial standing of a Designated Futures 

Broker or Key Related Firm, or registration statements; 

(b) Information developed and documents obtained by the 

relevant Canadian or United States Regulatory Authority 

or Canadian or U.S. SROs other than through regular 

reporting, such as internal financial reports, 

transactions between affiliated entities, commitments, 

guarantees, information as to proprietary trading 

including, as appropriate, information as to contraparties, and contingent obligations not reflected in the 

Designated Futures Broker or Key Related Firm's financial 

statement; 

(c) Audit, examination/investigation reports prepared by the 

relevant Canadian or United States Regulatory Authority 

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I 
or Canadian or u.s. SROs, including any complaints 

relative to financial compliance resulting therefrom; and 

(d) Other information, including but not limited to 

"corporate maps," the appropriateness of which may be 

assessed at the time of the request. 

2. Requests for information shall be made in writing 

wherever possible, but in cases of urgency may be oral, provided 

they are confirmed in writing within ten days. 

3. Requests for information shall specify the following: 

(a) The information sought by the Requesting Authority; 

(b) A general description of both the matter which is the 

subject of the request and the purpose for which the 

information is sought; 

(c) The Laws, Rules and Regulations pertaining to the matter 

which is the subject of the request; and 

(d) The desired time for reply and, where appropriate, the 

urgency thereof. 

ARTICLE IV: CONFIDENTIALITY OF INFORMATION 

1. The CVMQ and the OSC, and the CFTC have advised each 

other of, and acknowledge the applicability of, the local Laws, 

Rules and Regulations which govern the provision, use and 

confidentiality of information which may be exchanged under this 

FISMOU. The CVMQ and the osc, and the CFTC, respectively, will 

advise each other of any material changes therein. 

2 • To the extent permitted by their respective Laws, Rules 

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and Regulations, the Requesting and Requested Authorities and any 

other party to this FISMOU shall keep confidential requests made 

pursuant to this FISMOU, the contents of such requests and 

information received pursuant to this FISMOU and any other 

matters arising during the operation of this FISMOU. 

3. Consistent with paragraph 2 above, the Requesting 

Authority may use the information obtained pursuant to this 

FISMOU solely: 

(a) For purposes stated in the request, including risk 

assessment and ensuring compliance with or enforcement of 

the Laws, Rules and Regulations specified in the request; 

or 

(b) For purposes within the general framework of the use 

stated in the request, including conducting a civil or 

administrative enforcement proceeding or assisting in a 

receivership or bankruptcy proceeding involving the Laws 

Rules and Regulations of the Regulatory Authorities; to 

the extent permitted by consent or applicable Laws, Rules 

and Regulations, assisting in a self-regulatory 

enforcement proceeding; assisting in a proceeding, 

including a proceeding whose purpose is to permit a 

subsequent criminal prosecution; or conducting any 

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4. In order to use the information furnished for any purpose 

other than those stated in paragraph 3 of this Article, the 

Requesting Authority must first inform the Requested Authority of 

its intention and provide this Authority with the opportunity to 

oppose such use. If, under such conditions, the Requested 

Authority does not oppose such use, this Authority may subject 

the use of such information to certain conditions. In the event 

that this use of the information is opposed by the Requested 

Authority, the Authorities agree to consult pursuant to paragraph 

1 of Article VI hereunder as to the reasons for the refusal and 

the circumstances under which use of the information might 

otherwise be allowed. 

5. Except as contemplated in paragraphs 3 and 4 of this 

Article IV, if any party to this FISMOU receiving information 

pursuant to this FISMOU becomes aware that such information has 

been received by any person that is not a party to this FISMOU, 

it shall inform the party providing the information and will 

thereafter use its best efforts to ensure that such information 

will not be used in any way that involves disclosure not 

permitted by this FISMOU. 

6. If a party which receives information pursuant to this 

FISMOU receives any legally enforceable demand for such 

information, such party will to the best of its ability, prior to 

complying with the demand, promptly notify the party who provided 

such information, and assert appropriate legal 

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privileges with respect to such information as may be available. 

ARTICLE V: LIMITATIONS OF LIABILITY 

1. The parties to this FISMOU and their respective 

commissioners, directors, officers, employees or agents shall not 

be liable to the other parties to this FISMOU and their 

respective commissioners, directors, officers, employees or 

agents for any liability, loss or damage resulting from or 

claimed to have resulted from any delays, inaccuracies, errors or 

omissions with respect to the provision of information or any 

representation regarding that information as provided hereby or 

the failure to provide any such information or representation. 

It is understood that the information is being supplied on a best 

efforts basis and that no warranties, express or implied, are 

made by the parties with respect to the information to be 

furnished hereunder. 

2. The provisions of this FISMOU shall not give rise to the 

right on the part of any non-party to this FISMOU, directly or 

indirectly, to obtain any information or to challenge the execution of a request for information or the furnishing of any information or representation under this FISMOU. Nothing in this 

FISMOU shall entitle any person, entity or governmental authority 

to any rights as a third party beneficiary. 

ARTICLE VI: DISPUTES AND CONSULTATIONS 

1. The parties will engage in consultations with respect to ~ 

this FISMOU with a view to imp:::i~g its operation and r~lvin~ ~ 

#~~ 
any issues that may arise. The CVMQ and OSC, and CFTC will 

notify each other of material financial rule changes, including 

legislation pertaining to the financial status of Futures Brokers 

or FCMs. 

2. Any of the conditions of this FISMOU may be amended or 

waived by mutual agreement of the parties to the extent permitted 

by law. Any such amendment or waiver shall be confirmed in 

writing among the affected parties as soon as practicable. 

ARTICLE VII: EXECUTION 

1. This FISMOU will be effective from the date of its 

execution by the CFTC, CVMQ, OSC, NFA, The Montreal Exchange and 

TFE. 

2. Any U.S. SRO or Canadian SRO may become a party to this 

FISMOU with the agreement of the CFTC, the CVMQ and the esc by 

executing a counterpart hereof and providing notice of such 

execution to the other parties to this FISMOU. The executed 

counterpart shall be deemed to be a part of the original FISMOU 

effective from the date of execution of the counterpart. 

ARTICLE VIII: CONTACT OFFICERS 

Information shall be exchanged pursuant to this FISMOU 

through the contact officers identified in Appendix D or their 

designees as provided by written notice to the signatories to 

this FISMOU. 

ARTICLE IX: TERMINATION 

Any party may terminate its participation in this 

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provided it furnishes the other parties with at least 120 days 

prior written notice. 

ARTICLE X: EFFECT ON OTHER AGREEMENTS 

The provisions of this FISMOU shall have no effect on any 

other agreements or arrangements for the sharing of information 

between any of the parties hereto. Further, this FISMOU does not 

prohibit any Party from taking measures, to the extent permitted 

by any Laws, Rules, Regulations or international law, otherwise 

than as provided herein to obtain information necessary to 

conduct an effective financial compliance and risk assessment 

program. 

Signed this {2?/~ day of ~ 1991. 

United States Commodity 

Futures Trading Commission 

Commission des valeurs 

Qk: 

Pau~ Fortugno~ Cha~rman 

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National Putures Association 

Robert 

t8ktl~~ K. Wilmouth 

President 

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Ontario secu ities commission 

Robert 

Chairman 

The Montreal Exchanqe 

~- Giovanni Giarrusso 

Executive Vice Chairman 

The Toronto Futures Excbanqe