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

These responses underline the different possible options in the regulation regarding restitution: •  The first series of questions investigate to what extent restitution should be conditional, unconditional, immediate or with undue delays •  The second series of questions investigate to what extent the responsibility of the depositary and that of the investment manager are put to play, and whether responsibilities between these parties can be optimally defined ex-ante. The global priorities are for a contractual definition of responsibilities between depositaries and asset managers at

be retained; fund depositaries should not be put in a position where it would interfere with the management decision and responsibilities; The loss of assets should be recognized as a component of the investment risk and should be borne in proportion by all actors, including the assets managers and the investors. A clear recognition that due diligence duties imposed on the depositary cannot go beyond the custodian tasks performed by its delegates; (…) Fund depositaries cannot be requested to compensate for, or substitute, local regulators /supervisors that are in charge of the sound functioning of the financial and banking system.” (ETDF, 2011)

Figure 3.5.1: How much do you agree with the following assertions regarding regulations on the restitution of assets?

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An EDHEC-Risk Institute Publication