Key contractual provisions

The contractual arrangements on the use of ICT servicesdigital and data services provided through ICT systems to one or more internal or external users on an ongoing basis, including hardware as a service and hardware services which includes the provision of technical support via software or firmware updates by the hardware provider, excluding traditional analogue telephone services supporting critical or important functionsa function the disruption of which would materially impair the financial performance of a financial entity, or the soundness or continuity of its services and activities, or the discontinued, defective or failed performance of that function would materially impair the continuing compliance of a financial entity with the conditions and obligations of its authorisation, or with its other obligations under applicable financial services law shall include, in addition to the elements referred to in paragraph 2, at least the following:

1. full service level descriptions, including updates and revisions thereof with precise quantitative and qualitative performance targets within the agreed service levels to allow effective monitoring by the financial entity of ICT servicesdigital and data services provided through ICT systems to one or more internal or external users on an ongoing basis, including hardware as a service and hardware services which includes the provision of technical support via software or firmware updates by the hardware provider, excluding traditional analogue telephone services and enable appropriate corrective actions to be taken, without undue delay, when agreed service levels are not met;

2. notice periods and reporting obligations of the ICT third-party service provideran undertaking providing ICT services to the financial entity, including notification of any development that might have a material impact on the ICT third-party service provider’s ability to effectively provide the ICT servicesdigital and data services provided through ICT systems to one or more internal or external users on an ongoing basis, including hardware as a service and hardware services which includes the provision of technical support via software or firmware updates by the hardware provider, excluding traditional analogue telephone services supporting critical or important functionsa function the disruption of which would materially impair the financial performance of a financial entity, or the soundness or continuity of its services and activities, or the discontinued, defective or failed performance of that function would materially impair the continuing compliance of a financial entity with the conditions and obligations of its authorisation, or with its other obligations under applicable financial services law in line with agreed service levels;

3. requirements for the ICT third-party service provideran undertaking providing ICT services to implement and test business contingency plans and to have in place ICT security measures, tools and policies that provide an appropriate level of security for the provision of services by the financial entity in line with its regulatory framework;

4. the obligation of the ICT third-party service provideran undertaking providing ICT services to participate and fully cooperate in the financial entity’s TLPT(threat-led penetration testing) a framework that mimics the tactics, techniques and procedures of real-life threat actors perceived as posing a genuine cyber threat, that delivers a controlled, bespoke, intelligence-led (red team) test of the financial entity’s critical live production systems as referred to in Articles 26 and 27;

5. the right to monitor, on an ongoing basis, the ICT third-party service provider’s performance, which entails the following:

   1. unrestricted rights of access, inspection and audit by the financial entity, or an appointed third party, and by the competent authorityas defined in Article 46, and the right to take copies of relevant documentation on-site if they are critical to the operations of the ICT third-party service provideran undertaking providing ICT services, the effective exercise of which is not impeded or limited by other contractual arrangements or implementation policies;

   2. the right to agree on alternative assurance levels if other clients’ rights are affected;

   3. the obligation of the ICT third-party service provideran undertaking providing ICT services to fully cooperate during the onsite inspections and audits performed by the competent authoritiesas defined in Article 46, the Lead Overseerthe European Supervisory Authority appointed in accordance with Article 31(1), point (b) of this Regulation, financial entity or an appointed third party; and

   4. the obligation to provide details on the scope, procedures to be followed and frequency of such inspections and audits;

6. exit strategies, in particular the establishment of a mandatory adequate transition period:

   1. during which the ICT third-party service provideran undertaking providing ICT services will continue providing the respective functions, or ICT servicesdigital and data services provided through ICT systems to one or more internal or external users on an ongoing basis, including hardware as a service and hardware services which includes the provision of technical support via software or firmware updates by the hardware provider, excluding traditional analogue telephone services, with a view to reducing the risk of disruption at the financial entity or to ensure its effective resolution and restructuring;

   2. allowing the financial entity to migrate to another ICT third-party service provideran undertaking providing ICT services or change to in-house solutions consistent with the complexity of the service provided.

By way of derogation from point (e), the ICT third-party service provideran undertaking providing ICT services and the financial entity that is a microenterprisea financial entity, other than a trading venue, a central counterparty, a trade repository or a central securities depository, which employs fewer than 10 persons and has an annual turnover and/or annual balance sheet total that does not exceed EUR 2 million may agree that the financial entity’s rights of access, inspection and audit can be delegated to an independent third party, appointed by the ICT third-party service provideran undertaking providing ICT services, and that the financial entity is able to request information and assurance on the ICT third-party service provider’s performance from the third party at any time.