On January 2, 2014, FERC and the Commodity Futures Trading Commission (“CFTC”) executed a memorandum of understanding (“MOU”) pursuant to Section 720(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act to (1) facilitate information sharing in connection with market surveillance, (2) minimize duplicative information requests, and (3) address the treatment of proprietary and privileged information collected by the agencies. The MOU comes after a letter from three U.S. Senators urged FERC and the CFTC to improve cooperation in order to prevent energy market manipulation. In recent years, the lack of clear jurisdictional boundaries between the two agencies came to a head before the U.S. Court of Appeals for the D.C. Circuit after both FERC and the CFTC claimed jurisdiction over the enforcement actions against futures trader Brian Hunter (see May 6, 2013 edition of the WER).
The MOU requires each commission to promptly provide responsive information in connection with market surveillance or an investigation into potential manipulation, fraud, or market abuse under that commission’s jurisdiction upon request from the other commission. For instance, the MOU states that FERC will request information from the CFTC regarding, among other matters, designated contract markets, registered swap execution facilities, and registered derivatives clearing organizations. Meanwhile, the CFTC will request information from FERC regarding Regional Transmission Organizations (“RTOs”), Independent System Operators (“ISOs”), the independent market monitors of the RTOs and ISOs, the North American Electric Reliability Corporation, and interstate pipelines and storage facilities. Both agencies recognize that the MOU does not affect their respective rights to obtain information directly from an entity that they have the authority to regulate.
In addition, FERC and the CFTC agreed to preserve privileges and confidentiality related to the shared information. Finally, FERC and the CFTC agreed to share information concerning oversight, investigative, and enforcement activities to determine whether they have a mutual interest in a matter. If there is a mutual interest in a matter, the two agencies have agreed to coordinate activities and avoid duplicative information requests.
A copy of the MOU is available here.