Shedding Light on Non-Financial Risks – a European Survey

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

4. The (Fair?) Cost of Protection

custodians for 73% of respondents. At the same time, the industry should be aware that low fee services have limited capacity to absorb costs: some custodian services are priced as a couple of basis points of AUMs, and they were priced before their responsibilities were made stricter. So for depositary and custodian costs it is likely that expenses will be largely absorbed by increases in fees, which respondents sometimes seem to ignore.

69% are unsure), and 32% for custodians (62 % are unsure).

On the other hand, the costs of greater protection regarding 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

Figure 4.1.3: Would greater protection be a net cost to custodians?

Figure 4.1.4: Country group average of net cost of regulation for asset managers Would greater protection be a net cost to asset managers?

“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 High net cost, -1 for Net cost, 0 for Neutral, 1 for Net benefit, 2 for High net benefit.

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An EDHEC-Risk Institute Publication