It focused on the issues that could arise once exchanges began to consider outsourcing activities relating to regulatory and key operational functions, services and processes.
The Outsourcing Principles set out the factors that market operators should consider when deciding whether, and to whom, to outsource processes, services or functions, and are also designed to assist market authorities in their oversight of these arrangements.
In particular, the report focused on the issues that could arise once exchanges began to consider outsourcing activities relating to regulatory and key operational functions.
Outsourcing poses a number of important challenges to both markets and market authorities and these principles are designed to address those concerns.The following areas and related principles have been identified as requiring consideration when a market outsources any of its processes, services or functions:
· An outsourcing market should conduct suitable due diligence processes in selecting an appropriate third party service provider and in monitoring its ongoing performance.
· There should be a legally binding written contract between the outsourcing market and each third party service provider, the nature and detail of which should be appropriate to the materiality and nature of the outsourced activity to the ongoing business of the outsourcing market.
· The outsourcing market should take appropriate measures to determine that its service providers establish and maintain emergency procedures and a plan for disaster recovery, with periodic testing of backup facilities.
· The outsourcing market should take appropriate measures to determine that procedures are in place to protect the outsourcing market’s proprietary, member-related and potentially market sensitive information and software.
· Outsourcing with third party service providers should include contractual provisions relating to the termination of the contract and appropriate exit strategies.
· The market authority, the outsourcing market, and its auditors, should have access to the books and records of service providers relating to the outsourced activities and the market authority should be able to obtain promptly, upon request, other information concerning activities that are relevant to regulatory oversight.
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