Response to consultation on draft Guidelines on the sound management of third-party risk
Question n. 1 for Public Consultation: Are subject matter, scope of application, definitions and transitional arrangements appropriate and sufficiently clear?
We welcome EBAs stakeholder consultation on these guidelines and would like to take this opportunity to provide general comments on the matter based on our experience as a pan-European markets operator.
We have an interest in this consultation for multiple reasons. We have an investment firm within the Euronext group but also, importantly, we believe that the need for a different approach for intragroup arrangements should be managed consistently in all pieces of European legislation on a cross-sectorial basis. In this context we have also taken a specific interest in recent ESMA ‘Principles on third-party risk supervision’, which seem to contradict some of the essentials of the EU single market and in particular ongoing political efforts to build harmonised financial markets and to remove necessary burdens with an objective of the Savings and Investment Union (SIU).
Given the highly regulated environment we operate in and the upcoming legislative agenda we would like to outline our views on the topic of intra group outsourcing in the financial market infrastructure space.
In practice, the current outsourcing legislative framework makes no distinction between outsourcing within the same group of regulated entities and other types of outsourcing. This is quite problematic since it constrains entities such as Euronext from devising and implementing the most optimal operational set-ups within its group of regulated entities. In practice, this means needing to overcome significant hurdles and burden in the path towards a set-up that offers best outcomes for investors and clients in Europe.
We urge EBA alongside European policymakers to take stock of this complexity when developing such draft guidelines or principles of this nature. This is necessary for the outcome to be fit for purpose and in keeping with the operational realities of groups of such regulated entities. We believe that the current draft guidelines do not sufficiently take this into account, for example the intragroup arrangements referred to in paragraphs 24-25 should take due consideration of operational scenarios where all entities involved are based in Europe and are subject to relevant regulations and supervision. Additional safeguards and/or exceptions/alleviations are required to ensure proportionality as well as maintenance of a risk-based approach.
Accordingly, we would like to request that, in fine, intra group outsourcing within a group of already regulated market entities based in the EEA be treated differently to other types of outsourcing.
Question n. 2 for Public Consultation: Is Title II appropriate and sufficiently clear?
Please find Euronext general comments enclosed in accompanying attachment.
Question n. 3 for Public Consultation: Are Sections 5 to 10 (Title III) of the Guidelines sufficiently clear and appropriate?
Please find Euronext general comments enclosed in accompanying attachment.
Question n. 4 for Public Consultation: Is Title IV of the Guidelines appropriate and sufficiently clear?
Please find Euronext general comments enclosed in accompanying attachment.
Question n. 5 for Public Consultation: Is Annex I, provided as a list of non-exhaustive examples, appropriate and sufficiently clear?
Please find Euronext general comments enclosed in accompanying attachment.