Read the CySEC Circular C604
Memo #58-2023
CySEC Circular No: C604
Date: 16/10/2023
Subject: ΕΒΑ Guidelines on outsourcing (EBA/GL/2019/02)
Purpose: To bring the attention of the CIFs the EBA Guidelines on outsourcing arrangements.
In Summary:
CySEC has issued the Circular C604 on 13/10/2023 to bring the attention of the Cyprus Investment Firms (‘CIFs’) the Guidelines issued on 25/02/2019 by European Banking Authority (EBA) on outsourcing arrangements (the ‘Guidelines’).
CySEC informs that it has adopted the Guidelines by incorporating them into its supervisory practices and regulatory approach.
CySEC notes that the Guidelines apply to CIFs that fall under sections 9(1), (3) and (4) of the Prudential Supervision of Investment Firms Law of 2021, i.e. with initial capital requirement of €150.000 and €750.000.
The Guidelines specify the internal governance arrangements, including sound risk management, that CIFs should implement when they outsource functions, in particular regarding the outsourcing of critical or important functions. Furthermore, the Guidelines specify how these arrangements should be reviewed and monitored by competent authorities.
According to the Circular C604, CySEC urges the CIFs to review and amend accordingly any existing outsourcing arrangements, ensuring that these are in line with the Guidelines.
Furthermore, CySEC informs the CIFs that where the review and amendment of outsourcing arrangements of critical or important functions is not finalised by 30/06/2024, CIFs should inform CySEC accordingly via CySEC’s portal, including the measures planned to complete the review/amendment or the possible exit strategy.
Also, CySEC notes that the CIFs should complete the documentation (Section 11 of the Guidelines) of all existing outsourcing arrangements, other than for outsourcing arrangements to cloud service providers, in line with the Guidelines following the first renewal date of each existing outsourcing arrangement by no later than by 30/06/2024.
The EBA Guidelines on outsourcing arrangements can be found on the following link: https://www.eba.europa.eu/sites/default/documents/files/documents/10180/2551996/38c80601-f5d7-4855-8ba3-702423665479/EBA%20revised%20Guidelines%20on%20outsourcing%20arrangements.pdf?retry=1
Prudential Supervision of Investment Firms Law of 2021 can be found on the following link: https://www.cysec.gov.cy/CMSPages/GetFile.aspx?guid=7f44e19e-f8a1-4550-a7f9-7f1435297a3d
Read the CySEC Circular C604
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