PRIV 6.5.4 Provisions Applying to Outsourcing by Operator

(1) This rule applies in relation to an outsourcing of functions made by the operator of a scheme under this part to another person (the service provider).
(2) The outsourcing must be in writing and in the form of, or part of, an agreement between the operator and the service provider (the outsourcing agreement).
(3) The outsourcing agreement must—
(a) describe in adequate detail the functions (the outsourced functions) to be exercised by the service provider under the outsourcing; and
(b) describe in adequate detail the service standards to be applied by the service provider in exercising the outsourced functions; and
(c) state that it is an outsourcing agreement under these rules; and
(d) ensure that the operator can, at all times, effectively monitor the exercise of the outsourced functions by the service provider; and
(e) authorise the operator—
(i) to give further instructions to the service provider about the exercise of the outsourced functions; and
(ii) to withdraw the outsourcing at any time, including with immediate effect, if this is in the interests of the unitholders; and
(f) not prevent the operator from acting in the best interests of the unitholders in relation to the outsourced functions; and
(g) not prevent the scheme from being managed in the best interests of the unitholders; and
(h) ensure that the scheme's auditor can effectively exercise its functions in relation to the scheme; and
(i) require the service provider to comply with these rules, and any other law applying in the QFC, in relation to the outsourced functions; and
(j) apply the law of the QFC to the agreement; and
(k) ensure that the operator and its internal and external auditors have access to books, records and data relating to the exercise of functions under the outsourcing; and
(l) ensure that the outsourcing provides appropriate protection for confidential information and personal data; and

Note Personal data is defined in the glossary.
(m) provide appropriate contingency arrangements; and

Note See r 6.5.5 (3) and (4) (Outsourcing management).
(n) require the service provider to deal with the Regulatory Authority in an open and cooperative way in relation to the exercise of the outsourced functions; and
(o) require the service provider to give the Regulatory Authority access to books, records and data relating to the exercise of the outsourced functions; and
(p) require the service provider to give the Regulatory Authority any information it reasonably requires about the outsourced functions; and
(q) require the service provider to keep any records made by the service provider in relation to the outsourced functions for at least 6 years after the day they are made; and
(r) prevent the service provider from further outsourcing any of the outsourced functions to another person without the prior approval of the operator.
(4) Without limiting subrule (3), the operator must take the steps necessary to mitigate against any operational risks in relation to the outsourcing.
(5) The outsourcing agreement may provide that it has effect only in stated circumstances or subject to stated conditions, limits and directions.
(6) The outsourcing of the outsourced functions to the service provider—
(a) does not relieve the operator from any regulatory obligations in relation to the outsourced functions; and
(b) does not prevent the operator from exercising all or part of the outsourced functions, despite anything in the outsourcing agreement or any other agreement.
(7) The operator remains responsible for ensuring—
(a) that all applicable QFC regulatory requirements are complied with in relation to the outsourced functions; and
(b) that the outsourced functions are otherwise properly exercised.
(8) The service provider must exercise the outsourced functions subject to the terms of the outsourcing agreement, including any conditions, limits and directions in the outsourcing agreement.
(9) So far as the outsourcing agreement is expressed to operate as a delegation, these rules, all other laws applying in the QFC, the constitutional document and the latest filed prospectus apply to the service provider in exercising the outsourced functions as if the service provider were the operator.

Note Constitutional document is defined in r 3.1.1. Latest filed prospectus is defined in the glossary.
(10) Without limiting subrule (9), a function may be exercised by the service provider on the service provider's state of mind if—
(a) the exercise of the function is dependent on the operator's state of mind; and
(b) the function is included in the outsourced functions; and
(c) the outsourcing agreement is expressed to operate as a delegation in relation to the function.
(11) So far as the outsourcing agreement is expressed to operate as a delegation, anything done by or in relation to the service provider in relation to the outsourced functions is taken to have been done by or in relation to the operator.
(12) In this rule:

state of mind includes knowledge, intention, opinion, belief or purpose.
Derived from QFCRA RM/2010-06 (as from 1st January 2011)