United States: CFTC, SEC Sign New Memorandum Of Understanding On Information Sharing

The US Commodity Futures Trading Commission (CFTC) and Securities and Exchange Commission (SEC)— collectively the Commissions—announced that they had entered into a new Memorandum of Understanding (MOU) to facilitate information sharing on issues of common regulatory interest. This MOU replaces a similar one from 2008, with some notable differences.

PURPOSE OF MOU

Similar to the 2008 MOU between the Commissions, the purpose of this MOU is to share information and data concerning issues of common regulatory interest in matters deemed appropriate by the CFTC and SEC to fulfill their respective regulatory mandates. Information may be shared in connection with a specific incident, event, or activity. However, the Commissions note that they will generally seek data related to swaps and security-based swaps from swap data repositories and security-based swap data repositories. The Commissions explain that they will achieve the purpose of the MOU by having ongoing, informally, oral consultations; holding periodic meetings; responding to a commission's written requests for information sharing; or through other arrangements that may be developed.

CHANGES FROM PREVIOUS MOUs

The mandate of the 2018 MOU has been expanded from that of the 2008 MOU, as illustrated below. The Commissions can use non-public information internally to inform examinations, proceedings, civil actions, rulemakings, research, or other activities or matters with the CFTC's or SEC's jurisdiction. In addition, the Commissions can use non-public information in enforcement investigations or, with advance notice to the commission that provided the information to the other commission, in any proceeding or civil action.

In connection with the new mandate, appropriate "points of contact" at each commission have been identified as relevant personnel who should endeavor to share information with each other. The 2018 MOU does not mandate quarterly meetings or the requirement that staff provide its respective commission with confidential written summaries of the key points of each such meeting, whereas the 2008 MOU required that meetings be held no less frequently than quarterly and written summaries of each meeting. Further, the 2018 MOU rescinds the 2008 MOU addendum and its principles related to novel derivative products, such as the encouragement of innovation and competition, and providing market neutrality (permitting novel derivative products to trade in either or both an SEC- or CFTC-regulated environment), legal certainty for market participants to encourage competing or complementary products to be expeditiously brought to market, and "predictable and efficient consideration of requests" relating to novel derivative products.

The 2018 MOU does not alter existing practices related to the sharing of information between the CFTC's and SEC's enforcement divisions, nor does it eliminate confidential protections afforded to information shared pursuant to the MOU. However, the 2018 MOU includes detailed uses of and protections afforded to "Non-Public Information" (any data, information or reports submitted, received or shared between the Commissions pursuant to the 2018 MOU), including steps a commission must take when it receives a request for information under the Freedom of Information Act or to comply with a request or demand from a Congressional committee or a subpoena or court order.

The 2018 MOU also does not alter the 2004 MOU Regarding the Oversight of Security Futures Product Trading and the Sharing of Security Futures Product Information, the goal of which is to avoid unnecessary regulatory duplication or undue regulatory burdens, and provide the Commissions with notice of their examinations of exchanges and intermediaries as such examinations relate to security futures products.

 

2008 MOU

2018 MOU

Mandate

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 security futures products.

To establish a regulatory liaison and facilitate the discussion and coordination of regulatory action, as well as information exchange and data sharing, regarding issues of common regulatory interest. The Commissions agree to exchange information about examinations and other supervisory information relating to firms who are of common regulatory interest to the Commissions, including:

  • firms registered both as investment advisers with the SEC and commodity pool operators and/or commodity trading advisors with the CFTC,
  • firms registered both as broker-dealers with the SEC and futures commission merchants or introducing brokers with the CFTC, firms registered both as clearing agencies and derivatives clearing organizations, and firms registered both as swap dealers and security-based swap dealers.

Key Points of Contact

Dual-registered IAs and CPOs:

  • SEC: Director of the Office of Compliance Inspections and Examination or his designee
  • CFTC: Director of the Division of Clearing and Intermediary Oversight, and two staff members

Novel derivative products:

  • SEC: Director of the Division of Trading and Markets, and two staff members
  • CFTC: Director of the Division of Market Oversight, and two staff members

All other purposes of the MOU:

  • SEC: Director of the Division of Trading and Markets
  • CFTC: General Counsel

Dual-registrants:

  • SEC: Director of the Office of Compliance Inspections and Examination or his designee
  • CFTC: Director of the Division of Swap Dealer and Intermediary Oversight, and two staff members

Product classification, including novel derivative products:

  • SEC: Director of the Division of Trading and Markets, and two staff members (also including matters related to security-based swaps)
  • CFTC: Director of the Division of Market Oversight, and two staff members (also including matters related to swap data reporting requirements and swap execution facilities)

Clearinghouse matters:

  • Director of the Division of Clearing and Risk, who must designate two staff members for matters related to clearinghouses

All other purposes of the MOU:

  • SEC: Director of the Division of Trading and Markets
  • CFTC: General Counsel

WHAT'S NEXT?

Although the SEC and CFTC have entered into this MOU, which largely replicates the 2008 MOU with certain modifications that expand the topics covered by the MOU, we do not expect much to change.

This article is provided as a general informational service and it should not be construed as imparting legal advice on any specific matter.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
In association with
Related Topics
 
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions