Shedding Light on Non-Financial Risks – a European Survey

Shedding Light on Non-Financial Risks – a European Survey — January 2012

Executive Summary

Figure 9: Would greater protection be a net cost to depositaries?

Respondents are Split but Generally Rather Sceptical of Regulation Respondents agree that neither regulations nor the fund management industry have been able to adequately anticipate the rise of non-financial risks (in particular in UCITS funds from the time they invested in the main in stocks and bonds) and ensure these are controlled, managed and adequately communicated. Yet, there is a strong opposition among respondents on the role of regulation and of the industry, opposition that is partly explained by the respondents’ respective countries.

stricter obligations of restitution would fall mostly on depositaries and custodians. It would be a net cost or a high net cost to asset managers according to 42% of respondents (45% are unsure), to depositaries for 66%, and finally to custodians for 73% of respondents. At the same time, there is a clear limit to how much costs can be absorbed by low fees services such as depositary services, and for this sector, it is likely that expenses will be largely absorbed by increases in fees, which respondents sometimes seem to ignore.

Figure 10: How much do you agree with the following statments?

15

An EDHEC-Risk Institute Publication