Regulatory Update Germany
11
Outsourcing under scrutiny Regulatory Update Germany Jochen Kindermann Durlove Ahmed-Uddin Susanna Zwick (Morgan Stanley) 15 September 2021
Transcript of Regulatory Update Germany
Outsourcing under scrutinyRegulatory Update Germany
Jochen KindermannDurlove Ahmed-UddinSusanna Zwick (Morgan Stanley)
15 September 2021
Agenda
1 Development of the regulatory landscape
2 Outsourcing process
3 The FISG and its implications
4 Practical implications
Agenda
Outsourcing regime Regulatory development
Development of the regulatory landscape
02/19EBA Guidelines on
outsourcing arrangements
06/21“WpIG”
IFD/IFR implementationSec. 40 Securities
Institution Act
Sec. 25a German
Banking Act in connection with MaRisk
10/20BaFin Consultation on amendments to
the MaRisk
06/21 FISG entered into
force
08/21Updated MaRisk
published
10/20 “FISG“ proposal Financial Market Integrity
Strengthening Act
?/22
Next update of MaRisk
12/05First MaRisk
Outsourcing process Outsourcing process
EBA requirements
Risk analysis
On-going assessment and risk controlling
Categorising and planning
of an out-
sourcing
Out-sourcing decision
Contractual phase and
Execution of an
outsourcing agreement
Regular business operation
Termination
Supervision
1 2 3 4 5 6
Outsourcing process Outsourcing process
FISG requirementsNotification to BaFin of intention of
material outsourcing
Notification to BaFin of execution
Notification to BaFin of
an essential change and
relevant incidents
Risk analysis
On-going assessment and risk controlling
Categorising and planning
of an out-
sourcing
Out-sourcing decision
Contractual phase and
Execution of an
outsourcing agreement
Regular business operation
Termination
Supervision
1 2 3 4 5 6
FISG implicationsOutsourcing company
FISG
BaFin
Sub-outsourcing
Sub-outsourcing Service Provider
Institution
Outsourcing register
Outsourcing
Outsourcing Service Provider
Sub-sub-outsourcing
Sub-sub-outsourcing Service Provider
The FISG and its implications Disclosure obligations
Disclosure obligations
BaFin/Bundesbank
KWG institutions/WpIG institutions
Asset Manager
The FISG and its implications FISG
BaFin
Sub-outsourcing
Sub-outsourcing Service Provider
Institution
Outsourcing
Outsourcing Service Provider
Sub-sub-outsourcing
Sub-sub-outsourcing Service Provider
Instruction, monitoring
and information rights
Instruction and information rights
Instruction and information rights
Instruction and information rights
Appointment of a receiving agent in case of outsourcing of material services to a 3rd country
Practical implications Practical implications
Requirements under German law
Scope and date of application
• The new requirements introduced by way of the FISG and the WpIG apply as of 1 January 2022
• The new requirements introduced by way of the updated MaRisk need to be implemented by 31 Dec 2021
• BaFin grants transition period for existing agreements
Existing agreements need to be amended by 31 Dec 2022
Outsourcing register
• Institutions must maintain an updated register of information on all outsourcing agreements
• Register must be made available to BaFin upon request
• It must contain all information set out in recital 54 and 55 of the EBA Guidelines on outsourcing arrangements
• Requirement as of 1 January 2022
Practical implications Practical implications
Requirements under German law
Appointment of a receiving agent
• Institutions must contractually ensure with a third country Outsourcing Service Provider that it appoints
a domestic receiving agent
• Applies to the Sub-outsourcing Service Provider as well
• Only required in cases of material outsourcing
• Requirement as of 1 January 2022
Disclosure obligations
• Obligation to notify starts 1 January 2022
• Notification via BaFin’s MVP portal
• Format unclear – preference fields as in EBA guidelines
• Unclear what and when disclosure for intent has to be notified
• Notification can be submitted centralised at group level by the institution carrying out the central outsourcing
management
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Jochen [email protected]: +49 69 90745443
Durlove [email protected]: +49 69 9074540
