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MEMORANDUM OF UNDERSTANDING 

BETWEEN THE 

UNITED STATES COMMODITY FUTURES TRADING COMMISSION 

AND THE 

GERMAN BUNDESAUFSICHTSAMT FUR DEN WERTPAPIERHANDEL 

CONCERNING CONSULTATION 

AND COOPERATION IN THE 

ADMINISTRATION AND ENFORCEMENT OF 

FUTURES LAWS 

-=== 

October 17, 1997 
The United States Commodity Futures Trading Commission and the German 

Bundesaufsichtsamt fiir den Wertpapierhandelf recognizing increased international activity in 

futures and options transactions and acknowledging the need for mutual cooperation to 

facilitate the administration and enforcement of the futures and options laws applicable in their 

respective jurisdictionsf have reached the following understanding. This understanding does 

not create legally binding obligations or supersede domestic laws. 

ARTIClE 1: DEFINITIONS 

For the purposes of this Memorandum of Understanding: 

1.1 "Authority" means: 

1.1.1 the Commodity Futures Trading Commission of the United States; or 

1.1.2 the Bundesaufsichtsamt fOr den Wertpapierhandel of Germany. The 

Bundesaufsichtsamt fi.ir den Wertpapierhandel is responsible, among 

other things, for cooperation with foreign authorities in matters relating to 

the supervision of securities and futures exchanges, which are generally 

in the competence of the respective German state {Lander) where the 

exchanges arc located. 

1.2 "requested Authority" means an Authority to whom a request is made under this 

Memorandum of Understanding. 

1.3 "requesting Authority" means an Authority making a request under this 

Memorandum of Understanding. 

1.4 "foreign futures authority" means any foreign government, or any department, 

agency, governmental body, or regulatory organization empowered by a foreign 

government to administer Or enforce a law, rule, or regulation as it relates to a 

futures or options matter, or any department or agency of a political subdivision 

of a foreign government empowered to administer or enforce a law, rule, or 

regulation as it relates to a futures or options matter. 

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1.5 "person" means a natural person, unincorporated association, partnership, body 

corporate, or government - or a political subdivision, agency, instrumentality or 

equivalent authority of a government. 

1.6 "futures contract" means a futures or options transaction regulated or subject to 

regulation by the Authorities whether transacted over-the-counter or on or 

subject to the rules of an exchange or market. 

1.7 "futures business" means any person involved in: the offer, purchase or sale of 

futures contracts for the account of others; the purchase or sale of futures 

contracts for one's own account; advising others for compensation, directly or 

through media, regarding the offer, purchase or sale of futures contracts; the 

management, promotion, offer or sale of collective investment schemes 

involving futures contracts; or equivalent activities. The definition of a futures 

business includes persons, among others, acting in the capacity of commodity 

trading advisors, commodity pool operators, futures r.nmmission merchants, 

introducing brokers, assoc·lated persons, floor brokers and floor traders. 

1 .8 "futures processing business" means a clearing organization for futures 

contracts. 

1.9 "futures laws or regulations" means the provisions of the laws of the United 

States and/or Germany, or the regulations promulgated thereunder, concerning: 

1 .9.1 

1.9.2 

1.9.3 

price manipulation or trading ahead of a customer; 

misrepresent'ation, or the use of fraudulent or deceptive practices 

in connection with the offer, purchase, or sale of futures 

contracts or the conduct of futures businesses; 

the duties of persons to comply with reporting requirements; 

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1.9.4 

1.9.5 

1.9.6 

1.9.7 

1.9.8 

the making of false or misleading statements, or any material 

omissions in any application or report to the Authorities; 

the duties of persons or futures businesses to make full and fair 

disclosure of information in connection with the offer, purchase or 

sale of futures contracts; 

the duties of futures businesses and futures processing 

businesses pertaining to their financial, operational or other 

requirements, and their duties of fair dealing in the offer, 

purchase, sale and execution of futures contracts and conduct of 

business; 

the financial and other qualifications of those engaged in, or in 

control of, futures businesses and futures processing businesses; 

and 

any other futures or options matters that fall within the 

jurisdiction of the Authorities. 

ARTICLE 2: ESTABLISHMENT OF A FRAMEWORK FOR CONSULTATIONS 

REGARDING MATTERS OF MUTUAL INTEREST 

The Authorities intend to consult periodically about matters of mutual concern. Such 

consultation will be undertaken in the interest of enhancing cooperation to ensure: the 

efficiency and integrity of the futures markets of the United States and Germany; investor 

protection; appropriate market oversight; and the effective administration of the futures laws 

and regulations applicable in the United States and Germany. 

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ARTICLE 3: MUTUAL ASSISTANCE AND THE EXCHANGE OF INFORMATION 

3.1: General Principles regarding Mutual Assistance and the Exchange of Information 

3.1.1 This Memorandum of Understanding sets forth the Authorities'- intent with 

regard to mutual assistance and the exchange of information for the purpose of 

enforcing and securing compliance with the futures laws or regulations 

applicable in their respective jurisdictions. This Memorandum of Understanding 

does not create legal!y binding obligations or supersede domestic laws. 

3.1 .2 This Memorandum of Understanding does not prohibit an Authority from taking 

measures other than those herein to obtain information necessary to ensure 

enforcement of or compliance with the futures taws or regulations applicable in 

its jurisdiction. 

3.1 .3 This Memorandum of Understanding does not confer upon any person, other 

than those designated herein, the ability directly or indirectly to obtain, suppress 

or exclude any information or to challenge the execution of a request for 

assistance under this Memorandum of Understanding. 

3.1 .4 The Authorities recognize the importance and desirability of exchanging 

assistance and information for the purpose of enforc"ing and securing compliance 

with the futures laws or regulations applicable in their respective jurisdictions. 

However, a request for assistance may be denied by the requested Authority: 

3.1.4.1 

3.1.4.2 

3.1.4.3 

where the request would require the requested Authority to act in 

a manner thcit would violate local law; 

where the request is not made in accordance with the provisions 

of this Memorandum of Understanding; or 

on grounds of public interest. 

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Where a request for assistance is denied or opposed or where assistance is not 

available under local law, the requested Authority will provide the reasons for 

not granting the assistance and consult pursuant to Article 3. 7. 

3.2: Scope of Assistance 

3.2.1 The Authorities will, within the framework of this Memorandum of 

Understanding, provide each other with the fullest assistance permissible under 

the laws of the United States and Germany. Such assistance will be provided in 

order to facilitate: market oversight, including market and financial surveillance; 

the grant of licenses, authorizations, waivers or exemptions for the conduct of 

futures businesses and futures processing businesses; the inspection or 

examination of futures businesses and futures processing businesses; and the 

investigation, litigation or prosecution by the Authorities of activity that 

potentially violates the futures laws or regtJI<=ttions applicable in their respective 

jurisdictions. Assistance will be provided without regard to whether the activity 

described in the request for assistance would constitute a violation of the 

futures laws or regulations applicable in the jurisdiction of the requested 

Authority. 

3.2.2 The assistance available under this Memorandum of Understanding includes, 

without limitation: 

3.2.2.1 providing access to information in the files of the requested 

Authority; 

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3.2.2.2 

3.2.2.3 

3.2.2.4 

taking statements of persons; 

obtaining information and documents from persons; and 

inspecting or examining futures contracts, futures businesses, and 

futures processing businesses. 

3.2.3 The Authorities recognize that they may not in all circumstances possess the 

legal authority to provide the assistance or information referred to in Article 3.2. 

In such circumstances, the Authorities will use all reasonable efforts to obtain 

the aid of such other governmental agencies that can provide the assistance or 

information described in Article 3.2. 

3.3 Requests For Assistance 

3.3.1 Requests for assistance will be made in writing and will be addressed to the 

requested Authority's contact officer listed in Appendix A. 

3.3.2 Requests for assistance will include the following: 

3.3.2.1 

3.3.2.2 

3.3.2.3 

3.3.2.4 

a general description of both the subject matter of the request 

and the purpose for which the assistance or information is 

sought; 

a general description of the assistance, documents, information, 

or statements sought by the requesting Authority; 

any information in the possession of the requesting Authority that 

might assist the requested Authority in identifying either the 

persons believed to possess the information or documents sought 

or the places where such information may be obtained; 

the futures laws or regulations pertaining to the subject matter of 

matter of the request; and 

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3.3.2.5 the desired time period for the reply. 

3.3.3 In urgent circumstances, requests for assistance, and the response to such 

requests, may be effected by summary procedures and may be transmitted by 

means of communication other than the exchange of letters, provided such 

communication is confirmed in writing. 

3.4: Execution of Requests for Assistance 

3.4.1 Access to information held in the files of the requested Authority will be 

provided upon the request of the requesting Authority. 

3.4.2 Upon request, the requested Authority will take the statements of any person 

involved, directly or indirectly, in the activities that are the subject matter of the 

request for assistance or in possession of information that may assist in the 

execution of the request. The requested Authority will make a transcrirt nf 21ny 

statement it takes on behalf of the requesting Authority. 

3.4.3 Unless otherwise agreed by the Authorities, information and documents 

requested under this Memorandum of Understanding will be gathered in 

accordance with the procedures applicable in the jurisdiction of the requested 

Authority and by persons designated by the requested Authority. 

3.4.4 Notwithstanding Article 3.4.3, any person providing a statement pursuant to a 

request for assistance under this Memorandum of Understanding will have the 

right to have counsel preserit. 

3.4.5 Notwithstanding any other provision of this Memorandum of Understanding, any 

person providing a statement, information, or documents as a result of a request 

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for assistance under this Memorandum of Understanding will be entitled to all 

rights and privileg~s applicable in the jurisdiction of the requested Authority. 

Assertions regarding rights and privileges arising exclusively under the laws 

applicable in the jurisdiction of the requesting Authority will be preserved for 

consideration by the courts in that jurisdiction. 

3.4.6 Upon request, the requested Authority will inspect or examine specified books, 

records, futures businesses or futures processing businesses. 

3.5: Permissible Uses of Information 

3.5. 1 The requesting Authority may use non-public information furnished in response 

to a request for assistance under this Memorandum of Understanding solely: 

3. 5.1 .1 

3.5.1.2 

for the purpose stated in the request for assistance with respect 

to ensuring compliance with or enforcemP.nt of the futures laws 

or regulations applicable in the jurisdiction of the requesting 

Authority, including the legal provisions specified in the request 

and related provisions; and 

for a purpose within the general framework of the use stated in 

the request for assistance, including conducting an adjudicatory 

action or proceeding, conducting market and financial 

surveillance, assisting in a criminal prosecution, or conducting any 

related investigation. 

3.5.2 Before using non-public i'i-tformation furnished under this Memorandum of 

Understanding for a purpose other than those stated in Article 3.5, the 

requesting Authority must first inform the requested Authority of the intended 

use and provide the requested Authority with an opportunity to refuse such use. 

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If the requested Authority refuses the intended use, the Authorities will consult 

pursuant to Article 3.7 to discuss the reasons for the refusal and the 

circumstances under which the intended use might otherwise be allowed. 

3.6 Confidentiality 

3.6.1 Each Authority will keep confidential, to the extent permitted by law, requests 

made under this Memorandum of Understanding, the contents of such requests, 

and any matters arising under this Memorandum of Understanding. 

3.6.2 The requesting Authority will not disclose non-public information received under 

this Memorandum of Understanding, except pursuant to a legally enforceable 

demand, or in assistance of a foreign futures authority that has provided the 

requested Authority with an appropriate confidentiality undertaking, or in 

connection with an adjudicatory action or proceeding brought under the laws 

applicable in the jurisdiction of the requesting Authority to which the requesting 

Authority or its ~overnment, or a political subdivision thereof, is a party. 

3.6.3 To the extent possible, the requesting Authority will notify the requested 

Authority of any legally enforceable demand for non-public information furnished 

under this Memorandum of Understanding prior to compliance, and will assert 

such appropriate legal exemptions or privileges with respect to such information 

as may be available. 

3.6.4 To the extent permitted by law, the Authorities may by mutual consent make an 

exception to the principles set forth in Articles 3.6.1 and 3.6.2. 

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3.7: Consultation Regarding Mutual Assistance and the Exchange of Information 

3. 7.1 The Authorities will consult with each other regarding this Memorandum of 

Understanding with a view to improving its operation and resolving any matters 

that may arise. In particular, the Authorities will, upon request, consult in the 

event of: 

3.7.1.1 

3.7.1.2 

3.7.1.3 

a dispute over the meaning of any term used in this Memorandum 

of Understanding; 

an Authority's denial of or opposition to a request or proposal 

made by the other Authority pursuant to this Memorandum of 

Understanding; or 

a change in market or business conditions or in the legislation 

governmg the matters set forth in Article 1.9 or any other 

circumstance that makes it necessary or appropriate to amend or 

extend this Memorandum of Understanding in order to achieve its 

purposes. 

3.7.2 The Authorities may agree on such practical measures as may be necessary to 

facilitate the implementation of this Memorandum of Understanding. 

3. 7.3 Any of the conditions of this Memorandum of Understanding may be amended, 

relaxed, or waived by mutual consent. 

3.8: Unsolicited Assistance 

To the extent permitted by the laws and regulations of their respective jurisdictions, each 

Authority will use reasonable efforts to provide the other Authority with any information it 

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discovers that gives rise to a suspicion of a breach or anticipated breach of the laws or 

regulations applicable in the jurisdiction of the other Authority. 

ARTICLE 4: FINAL PROVISIONS 

4. 1 : Effective Date 

Cooperation in accordance with this Memorandum of Understanding will begin on the date of 

its signing by the Authorities. 

4.2: Termination 

Cooperation and assistance in accordance with this Memorandum of Understanding will 

continue until the expiration of 30 days after either Authority gives written notice to the other 

Authority of its intention to discontinue cooperation and assistance. If either Authority gives 

such notice, cooperation and assistance in accordance with this Memorandum of 

Understanding will continue with respect to all requests for assistance that were made before 

the effective date of notification until the requesting Authority terminates the matter for which 

assistance was requested. 

SIGNED at W~ b(_ ,this 17~dayof ~2 , 1997. 

FOR THE COMMODITY FUTURES 

TRADING COMMISSION OF 

THE UNITED STATES: 

Chairperson 

B~~~ 

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FOR THE BUNDESAUFSICHTSAMT FOR DEN WERTPAPIERHANDEL OF GERMANY: 

President 

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