CFTC and BoE Updates Agreement on Supervision of Cross-Border Clearing Organizations

The Commodity Futures Trading Commission (CFTC) and the Bank of England (BoE) announced​ on Tuesday that they have signed an updated Memorandum of Understanding (MOU) which supersedes the 2009 agreement. Pursuant to the MOU, the authorities will cooperate and exchange information in the supervision and oversight of cross-border clearing organizations operating in both the United States and the United Kingdom.

The agreement has been outlined in the joint op-ed wrote by CFTC Chairman Heath P. Tarbert and BoE Deputy Governor for Financial Stability Jon Cunliffe and published on Risk.net.

Both the US watchdog and the UK's central bank are responsible for supervising the largest and most important derivatives markets and central counterparties (CCPs) in the world. By highlighting that the supervision of CCPs operating in both countries is on the basis of close cooperation and mutual respect for each regulator's regime and supervisory practices, the MoU strengthens the relationship between the regulators. 

Through the MOU, the CFTC and the BoE also show their willingness to cooperate in efforts to fulfill their respective regulatory mandates, particularly to preserve the benefits of cross-border clearing activity. 

The MOU follows a 2019 joint statement by the CFTC, BoE, and other UK authorities on continuity of derivatives trading and clearing post-Brexit.