Scientific Beta

IPE: "Institutional investors have voiced concerns over opacity among index providers in a survey conducted by EDHEC-Risk Institute, which found the majority of respondents were dissatisfied with provider transparency. The report surveyed investors on their views of index providers, governance and transparency."

IPE 17/03/2014

(...) Institutional investors have voiced concerns over opacity among index providers in a survey conducted by EDHEC-Risk Institute, which found the majority of respondents were dissatisfied with provider transparency. The report surveyed investors on their views of index providers, governance and transparency. Called ‘Index Transparency – A Survey of European Investors’ Perceptions, Needs and Expectations’, the report showed that a significant majority (82%) of investors believed transparency was the best method for index providers to manage conflicts of interest. Only 12% suggested good governance was enough for this to take place. EDHEC’s report said a governance-based approach would not only be ineffective in dealing with conflict-of-interest risks but also counterproductive. It said: “It would also strengthen the existing oligopoly in the index provision industry with adverse consequences for competition and innovation. Such an approach is recognised as ineffective by investors and as costly by asset managers.” The research highlighted that only a 4.6% were ‘very satisfied’ with the current level of transparency from index providers, with two-thirds of respondents suggesting the level was inadequate. (...)