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CFTC-SEC Press Conference to Announce Agency MOU 

Opening Remarks of CFTC Acting Chairman Walt Lukken 

As Prepared for Delivery 

March 11, 2008 

Good morning. Thank you, Chairman Cox for the vision and strong leadership you have shown 

in finalizing today’s agreement. This is a historic development and I am pleased to sign this 

Memorandum of Understanding (MOU) with the SEC today. The CFTC appreciates the 

cooperative relationship we have enjoyed with the SEC over the years as Chairman Cox just 

outlined and today’s MOU marks another watershed in the narration of our agencies’ histories. 

The CFTC has been practicing the concept of “mutual recognition” with our international 

counterparts for years. This practice works well internationally, enabling us to avoid duplicative 

regulation, promote competition and expand economic opportunity, while working 

collaboratively with other expert international regulators to uphold our public mission. 

As Chairman Cox and I discussed issues of joint interest during the past several months, it 

became clear that this mutual recognition model would also enhance collaboration between our 

respective domestic agencies. 

It goes without saying that the CFTC and the SEC are two different regulators, with different 

regulatory approaches and statutory mandates, overseeing markets with different economic 

purposes – one for capital formation, the other for risk management and price discovery. 

However, we have many common regulatory interests as the U.S. financial markets are evolving 

and developing without regard to our agencies’ differences. Today, new financial products may 

share characteristics of both “securities” and “futures.” Signing a new MOU between our 

agencies will allow us to tackle not only today’s new and emerging issues but also those that we 

are sure to face in the future. 

Today’s document builds on an earlier interagency MOU signed in 2004, which focused on 

security futures products. The new agreement will complement that effort and allow our 

agencies to better harmonize our regulatory efforts, eliminating duplication and delay. One of 

our major areas of mutual interest is the consideration of novel derivatives products. The goal is 

to get these new products to market quickly, while ensuring that the proper market protections 

are in place. To facilitate consideration of novel products, the agencies crafted a set of governing 

principles that encourage innovation and competition, promote market neutrality, and provide 

legal and regulatory certainty for market participants. 

The MOU will also allow us to address future issues such as portfolio margining and foreign 

stock indices. Resolving these matters could bring enormous benefits and efficiencies to the 

marketplace. 

This event also marks the first step in taking this MOU out of theory and into practice. Today, 

both agencies are putting out notices requesting public comment on two new products that would 

be based on the streetTracks Gold Trust Shares. One product is an option that would be traded 

on an options exchange and the other is a future that would be traded on a security futures 
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exchange. As a principles-based regulator, I’m thrilled that the agreement utilizes flexible 

principles for guiding the agencies in their approach to these types of novel products and that 

they are already being put to practical use. 

In closing, I am very proud to be here today with Chairman Cox to announce this new 

interagency agreement and would like to thank him for his commitment to completing it. I 

would also like to thank my CFTC colleagues, Commissioners Dunn, Sommers and Chilton, and 

SEC Commissioners Atkins and Casey, for their support as we finalized the agreement. I would 

also like to recognize the staffs from both the SEC and CFTC for their hard work and diligence 

in reaching today’s goal. It is a major step forward as we work to ensure that the regulatory 

structure that oversees the U.S. financial markets embrace innovation, growth and competition in 

the global marketplace, without compromising market integrity, customer protection and the 

public good. That is the important balance we always strive to achieve and I am confident that 

we have hit that mark here today. Thank you.