Saying that he was making good on his pledge to further collaboration with other regulatory agencies, CFTC Chairman Christopher Giancarlo announced the signing of a Memorandum of Understanding (MOU) with the North American Securities Administrators Association (NASAA) to bolster cooperation in federal-state enforcement efforts. In remarks at NASAA’s FinTech Forum in Washington, Giancarlo called the agreement a "milestone" in the area of federal and state financial fraud detection and prosecution that will focus the various agencies’ collective resources to better uphold the law.
Giancarlo also said that the CFTC staff plans to issue an advisory providing guidance to exchanges and clearing houses on certain enhancements when listing a derivative contract based on virtual currency. The advisory, which reflects the CFTC staff’s current thinking based on its growing experience with virtual currency derivatives, will clarify staff priorities and expectations in reviewing new virtual currency derivatives to be listed on a designated contract market or swap execution facility, or to be cleared by a derivative clearing organization.
Mutual cooperation agreement. The mutual cooperation agreement signed by the CFTC and NASAA is intended to provide a framework for the sharing of confidential information between the CFTC and state securities regulators in the United States. Giancarlo said that the MOU will establish protocols and procedures for the access and use of information and treatment of non-public information in the course of enforcement efforts. Specifically, Giancarlo said that the agreement will create a framework for cooperation that will result in:
- leveraging of resources to support enforcement actions;
- enhancing the impact of enforcement efforts and their deterrent effect;
- encouraging the development of clear, consistent responses to violations of the Commodity Exchange Act;
- preventing the duplication of efforts; and
- facilitating vital exchanges of information and communications between the CFTC and state regulators.
"State securities regulators look forward to strengthening our bond with the CFTC to enhance investor protection and prevent fraud," NASAA President Borg said during his remarks at the forum. "NASAA members are unique among all federal and state regulators in that they can bring enforcement actions for both securities law and commodities law violations. This is particularly relevant given the recent epidemic of schemes involving cryptocurrencies and other modern types of commodities."
Borg noted that individual jurisdictions will be required to sign the MOU in order receive its benefits, including investigative leads from the CFTC’s Office of the Whistleblower or other tips, complaints and referrals the CFTC offers to provide to NASAA members.
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