FSA and CFTC to enhance regulatory cooperation and cross-border surveillance of oil markets

Lord Turner, chairman of the Financial Services Authority (FSA) and Gary Gensler, chairman of the U.S. Commodity Futures Trading Commission (CFTC), today announced that they have taken steps to strengthen cross border supervision of the energy futures markets. This action builds upon the existing cooperative efforts by the two authorities to address cross border oversight of US and UK energy markets, and will enhance the ongoing information sharing agreed to in the 2006 CFTC – FSA arrangement on linked contracts.

The respective organisations will immediately work toward implementing strengthened surveillance over US-linked energy contracts including, where appropriate:

•enhanced direct access rights to trade execution and audit trail data;
•mutual on-site visits of exchange operators;
•the sharing of exchange regulations and notices;
•the sharing of disciplinary notices; and
•the framework to consider the coordination of taking emergency action.
Lord Turner, FSA chairman, said:

“It is important that we continue to pursue all means to maintain fair, orderly and efficient markets, both nationally and internationally. The measures announced today will help to facilitate coordinated action, where appropriate. I am pleased that we continue to work collaboratively with the CFTC to achieve our common goals.”

Commenting on the latest international arrangement, CFTC chairman Gary Gensler stated:

“I believe that we must effectively utilise all existing powers to ensure that futures markets remain free of manipulation, fraud or other market abuses. Achieving this goal requires a coordinated international response. The CFTC will work closely with the FSA to respond to these challenges in a coordinated manner.”

In November 2006, the CFTC and FSA signed a Memorandum of Understanding to share information necessary for the respective authorities to detect potential abusive or manipulative trading practices that involve trading in related contracts on UK and US derivatives exchanges. The CFTC and FSA will continue to work together on oversight of related contracts traded in both of their markets and other matters of mutual concern.