CFTC and FERC Implement Information-Sharing MOU
Commentary by Bob Zwirb
The CFTC and FERC announced the initial transmission of market data under the recently adopted CFTC-FERC Memorandum of Understanding ("MOU") for use in analyzing market activities and protecting market integrity.The agencies also announced the creation of a staff-level Interagency Surveillance and Data Analytics Working Group to coordinate information-sharing between the agencies and focus on data security, data sharing infrastructure and the use of analytical tools for regulatory purposes.
As directed by Dodd-Frank, the CFTC and FERC entered into an MOU on January 2, 2014. According to the press release, the MOU ensures that information requests related to markets within the respective jurisdiction of each agency are properly coordinated to minimize duplicative information requests and to address the treatment of confidential information.
See: CFTC-FERC Press Release.
Related news: FERC and CFTC Sign MOUs Regarding Jurisdiction and Information Sharing (January 2, 2014); Cadwalader Memo: FERC and CFTC Reach Agreement on Information Sharing and Jurisdiction (January 7, 2014); FERC and CFTC Jurisdictional Battle (with Zwirb Comment) (September 13, 2013).
Commentary
This seems a positive development for all who are interested in seeing government agencies operate in a cooperative and coordinated manner for the public interest. However, it should be noted that this is the second MOU signed by the agencies in the last few years. In 2005, CFTC Chairman Reuben Jeffrey and FERC Chairman Joseph Kelliher signed a similar MOU that promised a new era of cooperation, which ultimately broke down over the agencies' incompatible views of jurisdiction in the Brian Hunter-Amaranth matter, which had to be decided by a federal court (http://www.cftc.gov/opa/press05/opacftcfercmou.htm).
The MOU of today likewise facilitates information requests related to markets within the respective jurisdiction of each agency, with the key issue being "the respective jurisdiction of each agency." But it is still a live issue with live bullets and has been a stumbling block to cooperation in the past and remains unresolved today. Further, it is an issue that is being played out in litigation today between FERC and Barclay's over whether the latter's use of futures-like instruments on the CFTC's former exempt commercial markets comes within FERC or the CFTC's jurisdiction. Ultimately, jurisdiction is an issue, as we have pointed out before, that cannot be allocated by mutual agreement.