Shedding Light on Non-Financial Risks – a European Survey

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

3. The Need for Change in Regulation and Risk Management Practices

not only in the AIFM space. Yet, since politicians have pushed the regulation of depositaries in the AIFMD, in practice, over the last two years, a lot of the debate on depositary duties has taken place in the context of AIFMD and alternative funds. It is however expected that the rules agreed within the AIFMD will eventually apply to UCITS funds, with possibly further restrictions or protection dictated by the nature of the fund, the assets it invests in and the rationale for contractual exemptions. Depositaries are entrusted with the safe-keeping of assets, and have a great importance in the security of these assets. The collapse of Lehman not only shown the world that a systemically large institution could fail; it put to the question of international cooperation

make, since distribution of funds is international and totally separated from their operations. Country differences are not pronounced on this topic. The only point standing out regards the responsibility of asset managers regarding distribution – respondents from France are more favourable to it than average, while those from the United Kingdom and the Germany, Austria and Netherlands group are significantly less. 3.5. Regulation on restitution Due to the Madoff affair, restitution is possibly the non-financial risk to have gained the most visibility in recent years. The Madoff affair shows that restitution can be a problem in the UCITS space and

Figure 3.4.2: Country group average of regulation on distribution How much do you agree with the following descriptions of responsabilities for distribution?

“Fr” is France, “UK” is the United Kingdom, “Ge+Au+Nl” is Germany, Austria and the Netherlands, “Lux+Irl” is Luxembourg and Ireland, and “RoE” is the rest of Europe. Answers are coded in the following manner: -2 for Strongly disagree, -1 for Disagree, 0 for Unsure, 1 for Agree, 2 for Strongly agree.

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An EDHEC-Risk Institute Publication