SEC and NFA Agree to Coordinate Oversight

The SEC and the National Futures Association signed a Memorandum of Understanding ("MOU") to collaborate on supervision and share information about firms and markets in areas of common regulatory interest.

The MOU covers entities subject to federal securities laws and the Commodity Exchange Act. Under the arrangement, staff of the two regulators will meet periodically to discuss risk assessment, examination planning, examination findings, supervisory priorities and emerging risks. Under the MOU, each agency may, at its discretion, provide the other with information on examinations of supervised persons of regulatory interest, as well as assessments of conditions in the securities and derivatives markets that may materially affect firms the other regulates. Each agency retains sole authority to decide which entities to examine, how to conduct examinations and what findings to make.

According to the MOU, information shared under the MOU is presumed to be non-public unless the providing party specifies otherwise, and each agency agrees to maintain confidentiality, to notify the other of any legally enforceable demand for the information, and to safeguard it using administrative, technical and physical controls consistent with National Institute of Standards and Technology standards, including encryption. Where the SEC seeks information that belongs to the CFTC, it will request that information directly from the CFTC under a separate SEC–CFTC Memorandum of Understanding. (See prior coverage.) 

The MOU states that it does not create legally binding obligations or enforceable rights, does not modify either agency's authority to enforce its own statutes and rules, and does not alter existing information-sharing arrangements.