IOSCO Releases New Guidance on Operational Resilience for Third-Party Outsourcing

On October 27th, 2021, The Board of the International Organization of Securities Commissions (IOSCO) published a set of updated outsourcing principles for regulated entities that outsource tasks to service providers. The updated Principles on Outsourcing1 are based on the earlier Outsourcing Principles for Market Intermediaries in 2005 and Markets in 2009, but their application has been expanded and now includes trading venues, intermediaries, market participants acting on a proprietary basis, and credit rating agencies (CRAs).

The guidance also comprises a set of fundamental precepts 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.

IOSCO’s newly formed Operational Resilience Group has been tasked with considering and reporting on issues raised by the COVID-19 pandemic relating to operational resilience, business continuity planning, and cyber security risks. The Group has expanded its seven Principles on Outsourcing, outlined below, to encompass these emergent challenges and how regulated entities can best equip themselves to handle evolving relationships with their third-party suppliers and service providers.

ABOUT THE AUTHORS

Michael Rosen
Senior Manager, DHG Advisory
michael.rosen@dhg.com

Ben Kornegay
DHG Advisory

Alex Monk
DHG Advisory

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