CFTC Collaborates With The UK FCA To Keep The Markets Safe

Specifically, the UK FCA got information from UK-based traders on behalf of the CFTC during an examination of certain crude oil trading on a CFTC-regulated futures exchange.

At a time when derivatives and securities transactions are increasingly cross-border in nature, international collaboration has become critical to guaranteeing market integrity.

UK traders looked into crude oil deals on the US derivatives market.

The CFTC release didn't say which UK-based traders are being looked into for trading crude oil or on which US derivatives exchange the trades happened.

The US regulator used the event to remind market participants that it relies on the help of its fellow domestic and foreign derivatives regulators to investigate violations of the Commodity Exchange Act that involve behavior across borders or bad behavior by market participants in other countries.

In this case, the UK-based traders who were being investigated questioned the UK FCA's ability to help the CFTC get the data. They took their case to a UK court, but the court turned down their request to continue with a judicial review of the UK FCA's decision to help the CFTC.

These merchants subsequently appealed to the English and Welsh Court of Appeal, which agreed with the UK FCA's involvement in the inquiry. The situation has now been resolved, and the information has been sent to the CFTC.

The FCA and CFTC are among the 100 members of a multilateral cooperation agreement.

Gretchen Lowe, Acting Director of the CFTC's Division of Enforcement, said, “In order to support the integrity, solidity, and vitality of the U.S. derivatives markets, the CFTC must be able to collect information from people and businesses trading on U.S. markets.” The United States derivative markets are open to people all over the world, and the decision of the Court of Appeal of England and Wales shows that traders can't avoid regulatory scrutiny just because they are in another country. The CFTC appreciates the FCA's efforts to achieve this outcome, as well as its commitment to cross-border enforcement cooperation.

'We applaud today's ruling,' said Mark Steward, Executive Director of Enforcement and Market Oversight at the FCA. The FCA has the right to collect information needed for investigations, especially when doing so helps a foreign regulator. This is important for making sure that investigations that involve more than one country can be done right. The FCA will not allow subjects of international inquiries based in the UK to hide behind unjustified claims or to stall international investigations by abusing lawful remedies.'

Under the Financial Services and Markets Act of 2000, the FCA may utilize its investigation powers to help foreign authorities. Also, the FCA often asks for help from authorities in other countries when it does its own investigations.

Both the FCA and the CFTC have signed a multilateral memorandum of understanding, which says that the signatories will help each other as needed. This memorandum has been signed by over 100 people.

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