ALFI responds to IOSCO Consultation Principles on Outsourcing

2 Oct 2020 | Statements and Position Papers  


IOSCO issued a consultation requesting feedback on proposed updates to its principles for regulated entities that outsource tasks to service providers.

Since the publication of IOSCO´s earlier principles (2005 and 2009) on outsourcing for market intermediaries and for markets, developments in markets and technology have increased regulatory attention on risks related to outsourcing and the need to ensure the operational resilience of regulated entities.

The revised principles comprise a set of fundamental precepts and a set of seven principles. The fundamental precepts cover issues such as the definition of outsourcing, the assessment of materiality and criticality, their application to affiliates, the treatment of sub-contracting and outsourcing on a cross-border basis. The seven principles cover the following areas:

    1. Due diligence in the selection and monitoring of a service provider
    2. The contract with a service provider
    3. Information security, business resilience, continuity and disaster recovery
    4. Confidentiality issues
    5. Concentration of outsourcing arrangements
    6. Access to data, premises, personnel and associated rights of inspection
    7. Termination of outsourcing arrangements

The ALFI response contains summary of assumptions proposed in the consultation, followed by the corresponding question and the response prepared by ALFI.