Release: #4068-97
For Release: October 28, 1997
MEMORANDUM OF UNDERSTANDING BETWEEN THE SEC, CFTC,
BANK OF ENGLAND AND FINANCIAL SERVICES AUTHORITY
The United States Securities and Exchange Commission (SEC), the
Commodity Futures Trading Commission (CFTC), and the Bank of England
(Bank) jointly announced the signing of a Memorandum of Understanding
(MOU) setting forth a pragmatic approach for cooperating and sharing
supervisory information. It is the first formal understanding among US
and UK securities, futures and banking regulators.
SEC Chairman, Arthur Levitt, CFTC Commissioner, Barbara Holum, and
Bank of England Governor, Eddie George, signed the MOU on behalf of
their respective agencies. Howard Davies, Chairman of the new UK
financial regulator, Financial Services Authority, also signed the MOU
to confirm that its provisions will continue upon the transfer of
banking supervision from the Bank to the Financial Services Authority
some time next year.
The MOU will enhance the ability of the regulators to obtain
information about the activities of US and UK internationally active
firms, including information about their internal controls and risk
management systems. The MOU also sets forth procedures for cooperating
to address potentially significant market events experienced by US or
UK securities or banking firms. The MOU is expected to improve the
effectiveness of financial supervision in an era of cross-border and
cross-sectoral activity.
Commenting on the MOU, SEC Chairman Levitt said:
Just as the geographic lines between markets are disappearing, the
industry lines are blurring as well. Firms that operate as securities
brokers in one nation may operate as a bank in another. This MOU is
truly a milestone in regulatory cooperation in an era where there is
much truth to the old adage that a chain is only as strong as its
weakest link. With this MOU, and more importantly, with the
relationships the SEC and the CFTC have built with the Bank, the SIB,
and now with the Financial Services Authority, we are forgoing a very
strong chain indeed.
CFTC Commissioner Holum commented:
On behalf of the Commodity Futures Trading Commission, I am pleased
to execute this MOU that symbolizes the increased cooperation among
the regulators of the banking, securities and futures sectors. It is
no longer possible for any one regulator to supervise adequately firms
that operate globally, and cooperation among regulatory authorities is
essential. We are therefore pleased to join in this precedent-setting
initiative that can significantly enhance our ability to supervise
firms engaged in global operations. We join the SEC in looking forward
to increasing our existing good relations with our UK
counterparts.
Bank of England Governor, Eddie George said:
The Bank has over recent years built up an extensive network of
information sharing agreements with overseas banking supervisors which
we will be bequeathing to the Financial Services Authority. And I
particularly welcome this MOU which cements the close relationships
that already exist between banking and securities supervisors in the
UK and the US. Such relationships are essential in a world
increasingly dominated by global financial conglomerates.
Financial Services Authority Chairman, Howard Davies, welcomed the
MOU and said:
There could not have been a better start for the Financial
Services Authority, on its first day, than to sign an MOU with the SEC
and CFTC. It is a symbol of the commitment we plan to give to
international co-operation in the future.