IOSCO has published a consultation paper on updating its guidance on the principles of outsourcing. It delayed publishing the consultation because of Covid-19 but now feels it is right to publish it, not least because the outbreak has highlighted the need for resilience in operational activities when external and unforeseen shocks occur.
IOSCO has based the principles on its 2005 principles for market intermediaries and its 2009 principles for markets and has expanded them also to cover trading venues, proprietary traders, credit rating agencies and FMIs. It proposes a set of fundamental precepts (including the definition of outsourcing and the assessment of materiality and criticality) and 7 principles, each with guidance, covering:
- due diligence and monitoring of service providers;
- the contract;
- information security, business resilience, continuity and disaster recovery;
- confidentiality
- concentration of outsourcing arrangements
- access to data, premises, personnel and associated rights of inspection
- termination of arrangements
The extended period for commenting lasts until 1 October.