not share information received pursuant to the MOU with self-regulatory organizations without
notice and consent of the other Party.

16. The Parties agree to take al] actions reasonably necessary to preserve, protect, and
maintain all privileges and claims of confidentiality related to non-public information provided
pursuant to the MOU, in accordance with applicable law.

17. Consistent with applicable law, to protect the confidentiality of non-public
information furnished under the MOU, in matters not involving actions or proceedings brought
by a Party or the United States, the Parties will:

a. Establish and maintain such safeguards as are necessary and appropriate to
protect the confidentiality of any such information provided;

b. Notify the party seeking production of non-public information that the
information originated with the other agency;

c. Unless prohibited by law, promptly notify the other Party in writing of any
legally enforceable demand or request for such information (including, but not limited to, a
subpoena, court order, or request pursuant to the Freedom of Information Act), and provide the
other Party a reasonable opportunity to respond to the demand prior to complying with the
demand or request;

d. Not furnish such information to any third party, except as otherwise
provided herein, or otherwise make public such information without prior written approval of the
Party providing the information; and

e. Consent to application by the other Party to intervene in any related action
for the purposes of asserting and preserving any privileges or claims of confidentiality with
respect to the originating Party’s non-public information.

Notwithstanding the confidentiality provisions set forth above, the MOU does not prevent the
Parties from using non-public information furnished under the MOU in either Party’s
investigations, actions, or proceedings, to the extent permitted by applicable law. Consistent
with restrictions found in applicable laws, the Parties will cooperate to facilitate transfer of
information to criminal law enforcement authorities, where appropriate, and will notify each
other of any transfer and use their best efforts to obtain appropriate assurances of confidentiality.

18. The Parties agree to use their best efforts to obtain appropriate assurances of
confidentiality, and to assert legal exemptions or privileges on the other’s behalf that may
reasonably be requested to be asserted.

19. The Parties intend that sharing of non-public information with each other pursuant
to the terms of the MOU will not constitute public disclosure, nor will it constitute a waiver of
confidentiality or any privilege applicable to such information.


ARTICLE IV: PROCEDURES FOR COORDINATION IN THE AREA OF NOVEL
DERIVATIVE PRODUCTS

12. To facilitate the discussion and coordination of issues of regulatory interest to one
or both Parties involving novel derivative products, the Parties hereby designate the following
persons as their point(s) of contact:

a. The SEC designates the Director of the Division of Trading and Markets,
who shall in turn designate two (2) members of his or her staff; and

b. The CFTC designates the Director of the Division of Market Oversight,
who shall in turn designate two (2) members of the CFTC staff

(collectively, the “Derivative Products Contacts”).
The Derivative Products Contacts shall endeavor to meet at least quarterly each year to identify

and discuss regulatory issues related to novel derivative products, including specific exchange
proposals to list and trade derivative products.

ARTICLE V: POINT(S) OF CONTACT
13. The SEC:
a. Designates the Director of the Office of Compliance Inspections and

Examinations, or his or her designee, as its point(s) of contact for matters related to firms dually
registered as Investment Advisers and CPOs; and

b. Designates the Director of the Division of Trading and Markets, or his or
her designee, as its point(s) of contact for all other purposes of the MOU, except as otherwise set
forth in Article [V hereof.

14, The CFTC:

a. Designates the Director of the Division of Clearing and Intermediary
Oversight, or his or her designee, as its point(s) of contact for matters related to firms dually
registered as Investment Advisers and CPOs; and

b. Designates the General Counsel, or his or her designee, as its point(s) of
contact for all other purposes of the MOU, except as otherwise set forth in Article IV hereof.

ARTICLE VI: PERMISSIBLE USES AND CONFIDENTIALITY OF
INFORMATION

15. The Parties agree to treat as confidential, to the extent permitted by applicable
laws, all non-public information provided pursuant to the MOU. Nothing in the MOU waives or
alters any provisions of any applicable laws relating to non-public information. The Parties will


20. Nothing in the MOU shall prevent a Party from complying with an order of a
court of the United States.

ARTICLE VII: EFFECTIVE DATE AND TERMINATION

The MOU shall become effective as of the date of its signing, shall remain effective unless
terminated by either Party, and may be revised or modified, upon agreement, or as required by
changes in relevant laws. The Party recommending the revision or modification shall provide
the other Party with 30 days’ written notice of the proposed change. Issues raised by the Parties
relating to administration of the MOU shall be resolved by the Chairmen of the respective
Parties, or by the Chairmen’s designees. The MOU does not create legally binding obligations
on the Parties and does not create any right enforceable against the Parties or any of their officers
or employees or any other person.

Either Party may terminate the MOU upon 30 days’ written notice to the other Party. Following
termination, all information that was provided subject to the MOU shall remain confidential
pursuant to its terms.

Agreed to this /] day of Me sh, , 2008.

aan

Christopher Cox Walter L. Lukken
Chairman Acting Chairman
Securities and Exchange Commission Commodity Futures Trading Commission


MEMORANDUM OF UNDERSTANDING
BETWEEN
THE U.S, SECURITIES AND EXCHANGE COMMISSION
AND
THE U.S. COMMODITY FUTURES TRADING COMMISSION
REGARDING
COORDINATION IN AREAS OF COMMON REGULATORY INTEREST

The mission of the SEC is to protect investors, maintain fair, orderly, and efficient securities
markets, and facilitate capital formation. The mission of the CFTC is to protect market users and
the public from fraud, manipulation, and abusive practices related to the sale of futures and
options on futures and commodities, and to foster open, competitive and financially sound
futures and options on futures and commodities markets as the means for managing and
assuming price risks. In addition, the SEC and CFTC have joint responsibility for regulating
SFPs.

The SEC and CFTC recognize that enhanced coordination and cooperation concerning issues of
common regulatory interest is necessary in order to foster market innovation and fair competition
and to promote efficiency in regulatory oversight. The SEC and CFTC further recognize that
through increased coordination and cooperation, the agencies can facilitate the introduction of
novel derivative products to market users and investors. Accordingly, the SEC and CFTC are
entering into this MOU in order to establish a permanent regulatory liaison and facilitate the
discussion and coordination of regulatory action regarding issues of common regulatory interest,
including, but not limited to, novel derivative products, portfolio margining, futures on foreign
securities and foreign security indexes, examination and oversight of firms registered as both
Investment Advisers with the SEC and as Commodity Pool Operators with the CFTC, and SFPs.

ARTICLE I: DEFINITIONS

For purposes of this MOU:

“CEA” shall refer to the Commodity Exchange Act.

“CFMA” shall refer to the Commodity Futures Modernization Act of 2000.

“CFTC” shall mean the U.S. Commodity Futures Trading Commission.

“Commodity Pool Operator” or “CPO” shall mean a commodity pool operator, as defined
under Section 1a(5) of the CEA, that is registered with the CFTC pursuant to Section 6n of the
CEA and the rules and regulations thereunder.

“Exchange Act” shall mean the Securities Exchange Act of 1934.

“Investment Adviser” shall mean an investment adviser, as defined under Section 202(a)(11) of

the Investment Advisers Act, that is registered with the SEC pursuant to Section 203 of the
Investment Advisers Act.


“Investment Advisers Act” shall mean the Investment Advisers Act of 1940.
“MOU” shall mean this Memorandum of Understanding.

“Parties” shall mean the SEC and CFTC.

“SEC” shall mean the U.S. Securities and Exchange Commission.

“SFP” shall mean security futures product, as defined in Section 1a(32) of the CEA and Section
3(a)(56) of the Exchange Act.

ARTICLE II: GENERAL PROVISIONS

1. The MOU is a statement of intent to consult, cooperate, and exchange information
in connection with areas of common regulatory interest, in a manner consistent with, and
permitted by, the laws and requirements that govern the Parties. It is anticipated that cooperation
will be achieved primarily through ongoing, informal, oral consultations, as well as periodic
meetings, written requests as needed, and other practical arrangements as may be developed by
the Parties.

2. The MOU does not create any legally binding obligations, 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 the MOU.

3. The MOU is intended to complement, but does not alter the terms and conditions
of, existing bilateral or multilateral arrangements concerning cooperation in supervisory or
enforcement matters, between the SEC and the CFTC. In addition, the Parties encourage their
respective staffs to maintain ongoing, ad hoc, communications to ensure coordination, as
appropriate, of the day-to-day operations of the Parties.

4, The Parties hereby reaffirm the Memorandum of Understanding between the SEC
and the CFTC Regarding the Oversight of SFP Trading and the Sharing of SFP Information,
dated March 17, 2004.

5. The Parties agree that nothing in the MOU modifies in any way each Party’s
ability and responsibility to enforce its statute and regulations.

6. The Parties intend periodically to review the functioning and effectiveness of the
cooperation arrangement with a view to expanding or altering the scope or operation of the MOU
should that be judged to further the intent of the Parties.


ARTICLE Il: PROCEDURES FOR COORDINATION IN AREAS OF COMMON
REGULATORY INTEREST GENERALLY

7. Representatives of the Parties, each designated pursuant to Article V hereof,
endeavor to meet at least quarterly each year to identify and discuss issues of regulatory interest
to either or both Parties, and to identify and discuss at early stages the regulatory implications of
such issues. After each such quarterly meeting or any quarterly meeting held pursuant to Article
IV of the MOU, representatives of the Parties shall provide a written summary of the key points
of the meeting to their respective Commission (which summary shall be treated as confidential
and non-public information in accordance with Article VI of the MOU).

8. The Parties agree to consult in the interest of developing practical arrangements to
coordinate and cooperate in areas of common regulatory interest.

9. The Parties agree to work to develop a process for coordinating, and exchanging
information about, examinations of firms registered both as Investment Advisers and CPOs.

10. To the extent necessary to supplement periodic and ad hoc consultations, upon
written request, each Party intends to provide the other Party the fullest possible cooperation and
information related to issues of common regulatory interest.

11. To the extent practicable and as appropriate in the particular circumstances, each
Party endeavors to inform the other Party in advance of issues that may impact the regulatory
interests of either Party and /or affect operations across both jurisdictions. Issues for
consultation and coordination include, but are not limited to:

a. General supervisory developments and decisions taken by either Party that
affect operations across both jurisdictions;

b. Material events that may have a significant impact on the operations or
activities of an entity or market under the other Party’s jurisdiction;

c. Enforcement actions, investigations, or sanctions that could adversely
impact an entity, product or market under the other Party’s jurisdiction;

d. Proposals to list or trade novel derivative products;

e. Alliances, mergers, or cross-shareholdings that occur at the holding
company level, where regulatory approval by either Party is required;

f. Amendments to the ownership or governance structure of an entity under
common jurisdiction, where regulatory approval by either Party is required; or

g. Other material changes to areas of common regulatory interest.