What may I outsource, and what stays my responsibility?

Question

Accepted Answer

You may not outsource your core business activities or your compliance function. SEBI gives no list of what counts as core for a Research Analyst, so do not assume a published list exists. If you outsource anything else, you stay fully liable and accountable, exactly as if the work were done in-house. You are liable to investors for loss caused by your vendor's failure, and for redressing the resulting complaints. The vendor's premises and data are treated as yours, and SEBI may inspect them at any time. Before outsourcing you need a written outsourcing policy, and every arrangement needs a legally binding written contract covering confidentiality that survives expiry, document preservation, sub-contracting, termination and exit, dispute resolution, and SEBI's inspection rights. You and the vendor must maintain contingency and disaster recovery plans, and periodically test backups. This is the only business-continuity requirement anywhere in the RA Master Circular, and it exists only in the outsourcing context. You also remain responsible for reporting suspicious transactions in respect of work done by third parties.

What may I outsource, and what stays my responsibility?

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