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June 19, 2018

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FCA and CFTC Enter Into Cooperation Agreement on FinTech

On February 19, the UK’s Financial Conduct Authority (FCA) and the United States Commodity Futures Trading Commission (CFTC) (collectively the Regulators) published a press release announcing that they have signed a Cooperation Agreement on the same date with each other on financial technology (FinTech) innovation.

The Cooperation Agreement aims to:

  1. foster the use of technology for more effective and efficient regulation and oversight of financial markets and participants (RegTech);
  2. enhance the sharing of information (e.g., market developments and trends) between the Regulators, with a view to fulfill their respective regulatory mandates and advance the understanding and utilization of FinTech and RegTech in the United States and UK; and
  3. facilitate the referral to each other of UK and US FinTech companies interested in entering each other’s market.

The support offered by the Regulators includes, but is not limited to:

  1. helping FinTech companies understand the regulatory framework in the relevant Regulator’s jurisdiction and the potential application of the regulatory framework to the relevant FinTech business;
  2. assisting FinTech companies with the pre-authorization application phase by discussing the application process and any regulatory issues that have been identified;
  3. allocating staff from each Regulator to provide guidance with respect to the Regulator’s authorization application; and
  4. assisting with enquiries that identify ambiguity in existing rules or regulations that may hinder beneficial innovation.

The Cooperation Agreement is the first agreement of its kind between the CFTC and a non-US counterpart. CFTC Chairman J. Christopher Giancarlo stated that the FCA’s FinTech initiative, Project Innovate, is the “gold standard for thoughtful regulatory engagement with emerging technological innovation” and that the Cooperation Agreement demonstrates the Regulators’ “cross-Atlantic commitment to facilitating market-enhancing innovation and sharing best practices in FinTech engagement.” FCA Chief Executive Andrew Bailey also noted that the Regulators will be hosting a joint event in London to demonstrate how firms can engage with them, details of which have yet to be announced.

The press release is available here and the Cooperation Agreement is available here.

©2018 Katten Muchin Rosenman LLP

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About this Author

John Ahern, Financial Attorney, London, Katten Law Firm
Partner

John Ahern, partner at Katten Muchin Rosenman UK LLP and head of the London Financial Services group, focuses his practice on banking, financial services, UK and European financial markets, and related regulations. His background in private practice and as in-house counsel at a global investment bank provides him with perspective on the unique regulatory issues facing the wholesale and private banking sectors. John advises multilateral trading facilities, broker-dealers and banks on trading, clearing and settlement as well as custody of securities—both physical and...

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Carolyn H. Jackson, International Attorney, Katten Muchin law firm
Partner

Carolyn Jackson is a partner in Katten Muchin Rosenman UK LLP and is a Registered Foreign Lawyer. She provides US financial regulatory legal advice to a broad range of market participants, including commercial banks, investment banks, investment managers, broker-dealers, electronic trading platforms, clearinghouses, trade associations and over-the-counter derivatives service providers.

Carolyn guides clients in the structuring and offering of complex securities, commodities and derivatives transactions and in complying with US securities and commodities laws and regulations. 

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Nathaniel Lalone, Katten Muchin Law Firm, Financial Institutions Attorney
Senior Associate

Nathaniel Lalone, a partner at Katten Muchin Rosenman UK LLP, has a broad range of experience in the regulation of financial products and financial markets, and frequently provides regulatory and compliance advice to trading venues, clearing houses and buy-side firms active in the over-the-counter (OTC) derivatives, futures and securities markets. He is actively involved in advising clients on the implementation of MiFID 2 and MiFIR in the European Union as well as the international reach of US financial services regulation. He also has significant experience with structuring...

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Neil Robson, private equity fund managers counselor, Katten Law Firm, London
Partner

Neil Robson, a regulatory and compliance partner with Katten Muchin Rosenman LLP, focuses his practice on counseling hedge and private equity fund managers and other investment advisers on operational, regulatory and compliance issues. He regularly addresses Financial Conduct Authority (FCA) and EU authorization and compliance under both the EU Alternative Investment Fund Managers Directive (AIFM Directive) and MiFID, cross-border issues in the financial services sector, market abuse, anti-money laundering and regulatory capital requirements, formations and buyouts of...

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