The SEC and CFTC signed a mutual cooperation agreement to establish a closer working relationship between the two agencies. The agreement establishes a permanent regulatory liaison between the agencies and provides for enhanced information sharing. It also establishes a framework that will facilitate discussions and coordination regarding issues in other areas of common regulatory interest between the two agencies, such as portfolio margining, foreign security index products, and the oversight of firms registered with both agencies.
Under the principles governing the review of novel derivative products, the agencies agree to recognize their mutual regulatory interests and encourage innovation, competition and legal certainty. Additionally, the agencies commit to share information relating to novel derivative products and act on any related requests in a timely manner. Finally, the agencies agree to endeavor, for products that implicate overlapping areas of regulatory concern, to permit such novel derivative products to trade in either or both a CFTC- or SEC-regulated environment, in a manner consistent with their respective laws and regulations.
As a first step under the agreement, the SEC and CFTC announced they are issuing notices requesting public comment on two new products. Both products would be based on the streetTracks ® Gold Trust Shares (Gold Shares). One product is an option that would be traded on options exchanges, and the other is a future that would trade on a single stock futures exchange. The two new products have raised questions about how they best should be regulated under federal law.
Please click http://sec.gov/news/press/2008/2008-40_mou.pdf for a copy of the memorandum of understanding.