KUALA LUMPUR: The Securities Commission Malaysia (SC) has released its revised Guidelines on Outsourcing for Capital Market Intermediaries.
The new guidelines will replace the Guidelines on Performance of Supervisory Functions at Group Level for Capital Market Intermediaries and Guiding Principles for Outsourcing of Back Office Functions for Capital Market Intermediaries.
In a statement Tuesday, , Aug 9 the SC said the revision was made to strengthen investor protection measures and enable intermediaries to focus on their core strengths of intermediation by outsourcing their back office functions to service providers.
"In appointing a service provider, intermediaries are required to exercise due care and diligence in the selection process, premised on the service provider's ability to undertake the functions efficiently without jeopardising clients' interest.
"Intermediaries must also demonstrate the controls used to continuously monitor and assess the service provider's quality of service and conduct," the SC said, adding, such assessment should be verified periodically by an internal or external auditor.
The outsourcing of functions deemed as material, such as the internal audit, risk management, compliance, fund accounting and maintenance of unit holders' register will still be subject to the SC or Bursa Malaysia's approval.
Other functions such as human resource and finance no longer require approval from the SC or Bursa Malaysia.
The SC said in creating a more business friendly and efficient environment for intermediation activities, the guidelines would also allow intermediaries to outsource to foreign service providers.
To ensure that such outsourcing arrangements do not impede the SC's supervisory efforts, full access to books and records kept offshore must be made available to it, upon request. - Bernama
The new guidelines will replace the Guidelines on Performance of Supervisory Functions at Group Level for Capital Market Intermediaries and Guiding Principles for Outsourcing of Back Office Functions for Capital Market Intermediaries.
In a statement Tuesday, , Aug 9 the SC said the revision was made to strengthen investor protection measures and enable intermediaries to focus on their core strengths of intermediation by outsourcing their back office functions to service providers.
"In appointing a service provider, intermediaries are required to exercise due care and diligence in the selection process, premised on the service provider's ability to undertake the functions efficiently without jeopardising clients' interest.
"Intermediaries must also demonstrate the controls used to continuously monitor and assess the service provider's quality of service and conduct," the SC said, adding, such assessment should be verified periodically by an internal or external auditor.
The outsourcing of functions deemed as material, such as the internal audit, risk management, compliance, fund accounting and maintenance of unit holders' register will still be subject to the SC or Bursa Malaysia's approval.
Other functions such as human resource and finance no longer require approval from the SC or Bursa Malaysia.
The SC said in creating a more business friendly and efficient environment for intermediation activities, the guidelines would also allow intermediaries to outsource to foreign service providers.
To ensure that such outsourcing arrangements do not impede the SC's supervisory efforts, full access to books and records kept offshore must be made available to it, upon request. - Bernama
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