FDIC Supervision of Technology Service Providers and Outsourcing Technology Services (with Lofchie Comment)

The Federal Financial Institutions Examination Council ("FFIEC") issued the revised Information Technology ("IT") Examination Booklet on the Supervision of Technology Service Providers ("TSP Booklet") and the updated IT Examination Booklet on Outsourcing Technology Services.

The Board of Governors of the Federal Reserve System ("FRS"), the Federal Deposit Insurance Corporation ("FDIC"), and the Office of the Comptroller of the Currency ("OCC") (collectively, the "Agencies") issued new Administrative Guidelines - Implementation of Interagency Programs for the Supervision of Technology Service Providers ("Guidelines"). Statement of Applicability to Institutions with Total Assets under $1 Billion: These documents apply to all FDIC-supervised financial institutions.

Lofchie Comment: These materials, particularly the booklet on outsourcing technology, seem like a pretty good guide to thinking through technology risks, not only for the small banks at which the booklets are directed, but, for any financial institution, including buy-side firms. Given that many of the biggest financial problems of the last few years have involved technology, and not just algo trading, it is probably worthwhile for anyone who has any responsibility for, or reliance on, technology as a supervisor to at least check out the ToC or flip through the booklet.

View letter in full here (links externally to FDIC website).