1In addition to the requirements set out in the MiFID outsourcing rules, when a MiFID investment firm outsources the investment service of portfolio management to retail clients to a service provider located in a non-EEA state, it must ensure that the following conditions are satisfied:
(in this chapter the "conditions").
[Note: article 15(1) of the MiFID implementing Directive]
In addition to complying with the common platform outsourcing rules, if one or both of the conditions are not satisfied, a MiFID investment firm may enter into such an outsourcing only if it gives prior notification in writing to the FCA containing adequate details of the proposed outsourcing and the FCA does not object to that arrangement within a reasonable time following receipt of that notification.
[Note: article 15(2) and (4) of the MiFID implementing Directive]
For the purposes of this rule a "reasonable time" is within one month of receipt of a notification. However, the FCA may seek further information from the MiFID investment firm in relation to the outsourcing proposal if this is necessary to enable the FCA to make a decision. Any effect this may have on the FCA's response time will be notified to the MiFID investment firm and that revised response time will constitute a reasonable time for the purposes of this rule.
A firm should only make an outsourcing proposal notification to the FCA after it has carried out due diligence on the service provider and has had regard to the guidance set out in SYSC 8.3. The FCA will expect a firm to only submit an outsourcing proposal notification in respect of a service provider that the firm has determined is suitable to carry on the outsourcing activity.
A notification under this section should include:
details on which of the conditions is not met;
if applicable, details and evidence of the service provider's authorisation or regulation including the regulator's contact details;
the firm's proposals for meeting its obligations under this chapter on an ongoing basis;
the proposed start date of the outsourcing; and
Where the FCA has not objected to the outsourcing agreement, the firm should have regard to its obligations under SUP 15 which include making the FCA aware of any matters which could affect the firm's ability to provide adequate services to its customers or could result in serious detriment to its customers or where there has been material change in the information previously provided to the FCA in relation to the outsourcing.