Bangkok--31 Oct--SEC
The SEC is seeking public comment on regulation on outsourcing in securities and derivatives businesses. The proposed regulation aims to standardize the supervision on outsourcing, facilitate more flexibility, reduce operating cost and enhance business in the area outside the business operator’s specialization.
Business operator will be allowed to outsource activities directly relevant to its core business,
for example, preparation of research report, risk management or mutual fund and private fund management which must be in compliance with specified conditions. For instance, fund management may be outsourced up to 20% of AUM of each asset management company and
must be clearly disclose in the prospectus. In case of private fund management, consent of the client is required. Moreover, certain criteria will be applicable to the business operator such as (i) outsourcing policy and arrangement must be made in writing; (ii) contingency plan must be in place for the case where service provider is unable to perform the outsource activities; and (iii) measures to prevent conflict of interest are also required.
For outsourcing to a company in corporate group which is a financial institution regulated by the SEC, audit firm with the SEC approved auditor and the Stock Exchange of Thailand (SET) or its subsidiary whose shares are held by the SET at least 75%, business operator simply notifies the SEC of the outsource activities at least 15 days in advance. In case of outsourcing to any other person, business operator is required to seek the SEC approval and outsourcing arrangement can be implemented upon grant of approval.
The consultation paper is available on the SEC website at www.sec.or.th. Stakeholders and the interested public are welcome to submit comments through the website, or through facsimile number 0-2263-6311 or email at
[email protected] until November 7, 2012.