Article 30 Key contractual provisions

TL;DR

The Digital Operations Resilience Act from the EU sets out the rights and obligations of financial entities and ICT third-party service providers when using ICT services. The contractual arrangements on the use of ICT services must include information such as the description of functions, locations for data processing, provisions for data security, service levels, availability of data and assistance with ICT incidents as well as termination rights and conditions for training. For critical or important functions, more detailed service level descriptions and full access rights must be provided. The ESAs shall also develop further elements to be considered when subcontracting ICT services. The Commission will then adopt these elements via regulatory technical standards by July 17th, 2024.

The rights and obligations of the financial entity and of the ICT third-party service providermeans an undertaking providing ICT services; shall be clearly allocated and set out in writing. The full contract shall include the service level agreements and be documented in one written document which shall be available to the parties on paper, or in a document with another downloadable, durable and accessible format.
The contractual arrangements on the use of ICT servicesmeans digital 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; shall include at least the following elements:
1. a clear and complete description of all functions and ICT servicesmeans digital 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; to be provided by the ICT third-party service providermeans an undertaking providing ICT services;, indicating whether subcontracting of an ICT service supporting a critical or important functionmeans a 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;, or material parts thereof, is permitted and, when that is the case, the conditions applying to such subcontracting;
2. the locations, namely the regions or countries, where the contracted or subcontracted functions and ICT servicesmeans digital 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; are to be provided and where data is to be processed, including the storage location, and the requirement for the ICT third-party service providermeans an undertaking providing ICT services; to notify the financial entity in advance if it envisages changing such locations;
3. provisions on availability, authenticity, integrity and confidentiality in relation to the protection of data, including personal data;
4. provisions on ensuring access, recovery and return in an easily accessible format of personal and non-personal data processed by the financial entity in the event of the insolvency, resolution or discontinuation of the business operations of the ICT third-party service providermeans an undertaking providing ICT services;, or in the event of the termination of the contractual arrangements;
5. service level descriptions, including updates and revisions thereof;
6. the obligation of the ICT third-party service providermeans an undertaking providing ICT services; to provide assistance to the financial entity at no additional cost, or at a cost that is determined ex-ante, when an ICT incident that is related to the ICT service provided to the financial entity occurs;
7. the obligation of the ICT third-party service providermeans an undertaking providing ICT services; to fully cooperate with the competent authoritiesas defined in Article 46 and the resolution authorities of the financial entity, including persons appointed by them;
8. termination rights and related minimum notice periods for the termination of the contractual arrangements, in accordance with the expectations of competent authoritiesas defined in Article 46 and resolution authorities;
9. the conditions for the participation of ICT third-party service providersmeans an undertaking providing ICT services; in the financial entities’ ICT security awareness programmes and digital operational resiliencemeans the ability of a financial entity to build, assure and review its operational integrity and reliability by ensuring, either directly or indirectly through the use of services provided by ICT third-party service providers, the full range of ICT-related capabilities needed to address the security of the network and information systems which a financial entity uses, and which support the continued provision of financial services and their quality, including throughout disruptions; training in accordance with Article 13(6).
RTS Paragraph is expanded on in a regulatory technical standard.

COIF Paragraph has special considerations for 'critical or important functions' as defined by Article 3 point 22.
The contractual arrangements on the use of ICT servicesmeans digital 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 functionsmeans a 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 servicesmeans digital 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 providermeans an 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 servicesmeans digital 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 functionsmeans a 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 providermeans an 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 providermeans an 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:
  
  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 providermeans an undertaking providing ICT services;, the effective exercise of which is not impeded or limited by other contractual arrangements or implementation policies;
  
  the right to agree on alternative assurance levels if other clients’ rights are affected;
  
  the obligation of the ICT third-party service providermeans an undertaking providing ICT services; to fully cooperate during the onsite inspections and audits performed by the competent authoritiesas defined in Article 46, the Lead Overseermeans the European Supervisory Authority appointed in accordance with Article 31(1), point (b) of this Regulation;, financial entity or an appointed third party; and
  
  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:
  
  during which the ICT third-party service providermeans an undertaking providing ICT services; will continue providing the respective functions, or ICT servicesmeans digital 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;
  
  allowing the financial entity to migrate to another ICT third-party service providermeans an 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 providermeans an undertaking providing ICT services; and the financial entity that is a microenterprisemeans a 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 providermeans an 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.

COIF Paragraph has special considerations for 'critical or important functions' as defined by Article 3 point 22.

exemption Paragraph has a reduced scope, i.e., it does not apply to all financial entities in Article 2(1) but some or only those of a certain size.
When negotiating contractual arrangements, financial entitiesas defined in Article 2, points (a) to (t) and ICT third-party service providersmeans an undertaking providing ICT services; shall consider the use of standard contractual clauses developed by public authoritiesmeans any government or other public administration entity, including national central banks. for specific services.
The ESAsEuropean Supervisory Authority shall, through the Joint Committeemeans the committee referred to in Article 54 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010;, develop draft regulatory technical standards to specify further the elements referred to in paragraph 2, point (a), which a financial entity needs to determine and assess when subcontracting ICT servicesmeans digital 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 functionsmeans a 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;.

When developing those draft regulatory technical standards, the ESAsEuropean Supervisory Authority shall take into consideration the size and overall risk profile of the financial entity, and the nature, scale and complexity of its services, activities and operations.

The ESAsEuropean Supervisory Authority shall submit those draft regulatory technical standards to the Commission by 17 July 2024.

Power is delegated to the Commission to supplement this Regulation by adopting the regulatory technical standards referred to in the first subparagraph in accordance with Articles 10 to 14 of Regulations (EU) No 1093/2010, (EU) No 1094/2010 and (EU) No 1095/2010.

COIF Paragraph has special considerations for 'critical or important functions' as defined by Article 3 point 22.

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