With advisory firms and brokerage houses that sell mutual funds increasingly looking to outsource activities to third-party service providers, NASD is now calling for more detailed oversight of vendors and explicit written policies and procedures.

In a five-page notice to member firms dated July 22, NASD outlined "accountability and supervisory" responsibilities for outsourced functions, along with a clarification of which activities are prohibited from being farmed out to outside contractors. The guidance comes in response to growing interest among registered investment advisors and brokerages in outsourcing activities such as transfer agent and data services, as well as activities other than those traditionally performed under clearing agreements.

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