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					    THE INTERNATIONAL DVELOPMENT OF REGULATING
          OUTSOURCING IN FINANCIAL SERVICES

                                   Mei-chun Lin,
  Graduate Institute of Financial and Economic Law, Southern Taiwan University,
        1, Nantai Street, Yongkang City, Tainan County 710, Taiwan ROC
                              linmei@mail.stut.edu.tw



                                     Abstract
Due to advancements in information technologies (IT) in recent years, financial
services firms began to outsource a great variety of IT activities, in a bid to reduce
costs and increase efficiency. The extent to which financial firms are using third
parties to carry out activities that the firms would normally have undertaken
themselves has increased enormously. The outsourcing arrangements are also
becoming increasingly complex. Although outsourcing can yield enormous benefits, it
also introduces new challenges and risks. Outsourcing by financial services firms
raises important concerns for both the financial services firms and their regulators.
Financial institutions will need to develop specific risk-management plans in relation
to outsourced functions. In an outsourced environment, it is harder for regulators to
consistently impose and make certain that its regulatory compliance standards are
being maintained. New regulations applicable to outsourcing by regulated firms in the
financial sector have been proposed at international and EU levels. This article intends
to examine the current regulations and principles for outsourcing as provided by the
Joint Forum and the EU Markets in Financial Instruments Directive (MiFID).
Through the analyses and discussion of the regulatory regimes, it is attempted to make
a contribution to some of these issues regarding outsourcing in financial services.


Keywords: Outsourcing, Financial Services, MiFID

				
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