US and Japan To Cooperate in Oversight Of Regulated Brokers

Commodity Futures Trading Commission and Japanese Financial Services Agency Sign Memorandum of Cooperation

Today, leaders of the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Services Agency of Japan (JFSA) signed a Memorandum of Cooperation (MOC) regarding cooperation and the exchange of information in the supervision and oversight of regulated entities that operate on a cross-border basis in the United States and Japan. 

This collaboration between two of the world’s most prominent regulatory authorities marks a further step toward global standardization of regulatory jurisdiction, following last year’s ministerial-level letter dated April 18 which was sent to US Secretary of Treasury Jacob Lew, containing signatures from senior government officials around the world detailing a series of core principles on how cross border rules relating to OTC derivatives should be adopted on the basis that if they were replicated by all other jurisdictions, there would not be duplicative or conflicting requirements, or regulatory gaps.

The letter to Secretary Lew was signed and endorsed by British Chancellor of the Exchequer George Osborne, along with Guido Mantega, Brazil’s Minster of Finance, Michel Barnier, Commissioner for Internal Market and Services at the European Commission, and further finance ministers from France, Germany, Italy, South Africa, Russia, Japan and Switzerland. 

With a clear agreement between so many nations that a global collaboration on OTC derivatives should be achieved, it was agreed in principle in April last year that this should be approached through substituted compliance or equivalence arrangements. which should aim to provide regulatory recognition of our mutual efforts to put in place measures to deliver the 2009 Pittsburgh commitments on OTC derivatives. 

The arrangements will be without prejudice to the right to withhold equivalence or substituted compliance arrangements where regulatory reforms are materially different in outcome. 

Through today’s MOC which was signed by CFTC Acting Chairman Mark Wetjen and JFSA Commissioner Ryutaro Hatanaka, the CFTC and JFSA express their willingness to cooperate with each other in the interest of fulfilling their respective regulatory mandates regarding derivatives markets. The scope of the MOC includes markets and organized trading platforms, central counterparties, trade repositories, and intermediaries, dealers, and other market participants. 

With the world of electronic trading hosting market participants from so many jurisdictions conducting their business on a worldwide scale, it certainly appears that the physical size of the globe is ever decreasing.

For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.

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