SEC revised outsourcing rules

Bangkok, June 5, 2013 – The SEC revised rules on outsourcing in securities and derivatives businesses to enhance flexibility and efficiency of business operators. The revised rules will become effective from June 16, 2013.

Vorapol Socatiyanurak, SEC Secretary-General said: “The revised outsourcing rules will allow securities and derivatives business operators to outsource activities directly relevant to its core or non-core businesses to enhance flexibility and efficiency of their business operations.  In principle, the business operators must have an apparent outsourcing policy, measure, guidelines, service provider supervision, risk management, and business continuity measures.  However, outsourcing does not discharge business operators from responsibility in the outsourced activities.”

Business operators will be allowed to outsource activities, for instance, risk management, internal audit and control, information technology management, etc. Some important or expertise activities, will be allowed to outsource only to subsidiaries, audit firms, or financial institutions. For instance, outsourcing risk management and compliance will be allowed only to subsidiaries; while the fund investment back office possessing  important information of funds and customers will  be allowed to outsource only to the business operators’ subsidiaries or financial institutions.

 

Outsourcing to other licensed securities firms or derivatives business operators can be done without the SEC’s approval but will be allowed to the extent that it is deemed necessary to increase business efficiency. Importantly, outsourcing must not be utilized as if the business operators do not operate the business themselves.

 

Moreover, outsourcing to non-licensees will be permissible as well. The business operators simply give the SEC advance notice, if the outsourcees are: financial institutions, subsidiaries of the business operator, audit firms where the SEC-approved auditors work, the Stock Exchange of Thailand or its subsidiaries, or service providers with at least five-years of related experience. In case of outsourcing to any other persons, the SEC’s prior approval is needed. The SEC’s consideration will focus on business operator qualifications in terms of sufficient personnel and operating system, financial condition, and fit and proper.