Proposals for better management of non-financial risks within the European fund management industry

This white paper proposes that the sophistication of UCITS is one of the principal causes of a rise in non-financial risks in the European fund management industry. These risks are not the direct result of positions taken by funds on financial markets and for which they receive a reward proportional to their exposure, but rather produced by the operation of the value chain of the collective investment management industry itself.

It discusses the question of whether current regulation (AIFMD, UCITS V, MiFID II, IMD II, PRIPS and EMIR), even if it does contain some very positive elements in terms of investor protection against non-financial risks, will solve the problem.

Three major themes are considered as a solution toward the better management of non-financial risks.