Mon, Mar 2, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

EDHEC-Risk survey reveals that “transparency, information and governance” tops the list of concerns for European fund managers

Tuesday, April 17, 2012
Opalesque Industry Update - More than 160 high-level European fund management industry professionals were surveyed by EDHEC-Risk as part of the “Risk and Regulation in the European Fund Management Industry” research chair, sponsored by CACEIS.

For the respondents to this survey, entitled “Shedding Light on Non-Financial Risks – a European Survey,” the main causes of the increase in non-financial risks are firstly the growing sophistication of operations (a cause considered important by 77% of respondents), followed by the reduced capacity of some intermediaries to guarantee deposits (59%), unclear or inappropriate regulation (57%) and finally the total absence of responsibility of management companies regarding restitution (53%).

The main message from this study is that the regulatory priorities for the respondents relate to themes to which the regulator has paid less attention in recent work, notably AIFMD. For the respondents, “transparency, information and governance” are the priority for the regulation of non-financial risks, followed by the financial responsibility of the industry. On the latter point, it is important to stress the recognition that non-financial risks are largely the consequence of the fund manager’s decisions.

On “transparency, information and governance,” the primary concern of respondents, a huge majority (91%) agrees that the regulator must ensure that information is genuinely fair, clear and not misleading.

On the financial responsibility of the industry in non-financial risks, the second greatest concern for respondents, 79% consider that “fiduciary duties of asset managers should be reinforced, by stating that they must invest for the sole benefit of their clients,” and 67% agree that asset managers should have greater responsibility for non-financial risks. They are therefore in complete agreement with a previous EDHEC-Risk Institute study, which considered that the responsibility for decisions and compliance with regulatory obligations does not rest with the depositary alone.

Responsibilities for the restitution of assets should be contractually defined between depositaries and asset managers; for 68% of respondents this should be done at the creation of the fund. Moreover, the depositaries should only be unconditionally responsible for the assets that they actually control (69%), and responsibilities should therefore be defined by asset class.

In the area of distribution, a strong majority of respondents (81%) is in favour of clarifying responsibilities according to who controls the information, with distributors having a role to play as the first line of defence for investors (69%).

The costs of stronger protection should be largely supported by the industry and would not be totally transferable to investors. Strengthening the regulation would therefore result in a net cost for asset managers (for 70% of respondents), depositaries (69%) and custodians (73%).

Finally, faced with the growing complexity of UCITS and the resulting increase in counterparty risks, the idea of secure UCITS funds, where the depositary would be unconditionally responsible (contractually or legally) for the restitution of assets, should be an option to consider, according to 67% of respondents.

Press release

bc

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Seth Klarman of Baupost outlines his investment process as major stock market indices are stretched, Myriad hedge fund sold bulk of its Alibaba stake last year[more]

    Seth Klarman of Baupost outlines his investment process as major stock market indices are stretched From Valuewalk.com: As hedge fund manager Seth Klarman, leader of the $28 billion Baupost Group, reviews 2014 performance and considers investors gained near 7 percent on the year, he cons

  2. Adamas Asset Management and Ping An Insurance to co-manage $500m debt fund[more]

    Komfie Manalo, Opalesque Asia: Hong Kong-based Adamas Asset Management and Ping An Insurance Group, one of China’s largest financial institutions, have finalized a memorandum of und

  3. Opalesque Exclusive: dbSelect’s top ten FX strategies average almost 10% in January[more]

    Benedicte Gravrand, Opalesque Geneva: In one of Deutsche Asset & Wealth Management (AWM)’s hedge fund platforms, called dbSelect, a number of FX Strategies did very well in January. dbSelect is a managed investment platform for unf

  4. Opalesque Exclusive: SEC’s Mark J. Flannery warns hedge funds against valuation misconduct[more]

    Komfie Manalo, Opalesque Asia: Securities and Exchange Commission chief economist and director of Division of Economic and Risk Analysis (DERA) Mark J. Flannery has warned of the risks posed by market misconduct, particularly in the true valuation of assets by hedge fund managers. In his

  5. Dymon Asia's $3bn macro hedge fund lost 10.45% in January[more]

    From Reuters.com: Dymon Asia's $3.1 billion macro hedge fund lost 10.45 percent in January, performance data seen by Reuters showed, a month where many peers lost heavily after a surprise rise in the Swiss franc. Singapore-based Dymon, set up by Danny Yong, a former founding partner and chie