§ Mr. Tim SmithTo ask the Secretary of State for Trade and Industry what action he proposes to take following the United States Commodity Futures Trading commission's assertion of extraterritorial jurisdiction implicit in the terms of the exemption order issued on 15 May 1989.
§ Mr. RedwoodMy hon. Friend the Member for Warwickshire, North (Mr. Maude) wrote on 12 May to the chairman of the Commodity Futures Trading Commission to express the Government's concerns about the need for moderation and restraint in the exercise of powers by one authority in respect of problems arising in the jurisdiction of another. In particular, he made clear our view that the CFTC should rely exclusively on the United Kingdom regulatory system for the protection of United States investors who place unsolicited futures business with United Kingdom firms. We are continuing to pursue this issue with CFTC representatives, keeping in close contact with the AFBD and other interested parties in the814W United Kingdom, with the aim of securing satisfactory arrangements which safeguard the public interest in the United Kingdom.
§ Mr. Tim SmithTo ask the Secretary of State for Trade and Industry what information he has on the terms arid conditions attached to the exemption order issued by the Commodity Futures Trading Commission on 15 May 1989 under rule 30.10 of its rules, setting out the terms on which United Kingdom firms are permitted to transact business on United Kingdom markets for United States customers; and what assessment he has made of the problems which the exemption order will cause United Kingdom commodity trading companies.
§ Mr. RedwoodThe terms and conditions attached to the exemption order issued by the Commodity Futures Trading Commission on 15 May were published in the United States Federal Register on 19 May. I am placing a copy of the relevant extract in the Library of the House. The order will enable those United Kingdom Commodity trading companies which seek exemption under it to market United Kingdom futures products in the United States without being subject to the full range of United States regulatory controls. As a condition of exemption, the CFTC has insisted on one main departure from United Kingdom regulatory requirements. Under SIB's Financial Services (Clients' Money) Regulations, experienced and professional United Kingdom clients are allowed to release firms from the obligation to hold their funds on trust in separate client accounts. This option would not be available to American investors whose funds must be segregated in all cases, in line with current domestic United States practice. The Government consider that on balance the exemption order will benefit British firms trading in the United States. We have however made clear to the American authorities our objection to the jurisdictional reach of the order, in particular its implied application to unsolicited business placed by United States clients with United Kingdom firms in the United Kingdom. We are seeking a satisfactory resolution to this problem in discussions with the CFTC.