BNM issued a revised prudential framework on outsourcing arrangements for financial institutions. The framework aims to ensure that risk management practices for outsourcing arrangements remain effective moving forward amid intensification of technological advances in a more globalized and digitized environment. This exposure draft sets out BNM’s proposed regulatory requirements on outsourcing arrangements by financial institutions. Responses on the proposed regulatory requirements must be submitted to BNM by October 27, 2017.
The proposals seek to ensure that financial institutions effectively monitor and control risks arising from outsourcing arrangements and that these arrangements do not hamper BNM’s continued ability to effectively supervise the business of financial institutions, including with respect to recovery and resolution efforts. The proposals in the exposure draft reinforce BNM’s expectations on broader governance and set out improved processes that must be in place to manage outsourcing arrangements. These include enhanced due diligence on service providers and stronger protection of data confidentiality. BNM also expects financial institutions to demonstrate that controls over outsourcing risk management arrangements are operating effectively and remain commensurate with risk profiles of financial institution. The revised requirements also ensure BNM’s continued ability to conduct effective supervisory oversight on financial institutions, including the increasingly complex outsourcing arrangements and concentration to a particular service provider. The policy document comes into effect on January 01, 2018, subject to certain transitional arrangements.
Related Link: Exposure Draft on Outsourcing (PDF)
Comment Due Date: October 27, 2017
Effective Date: January 01, 2018
Keywords: Asia Pacific, Malaysia, Banking, Outsourcing Arrangements, Prudential Framework, Exposure Draft, BNM
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.