Pillar 3 Disclosure

SCIO Capital LLP (the ‘Firm’) is authorised and regulated by the Financial Conduct Authority (the ‘FCA’). The Firm is a UK domiciled discretionary investment manager to professional clients. The Firm is categorised as ‘BIPRU Firm’ for capital purposes and reports on a solo basis. The Firm’s Pillar 3 Disclosure fulfils the Firm’s obligation to disclose to market participants’ key pieces of information on a firm’s capital, risk exposures and risk assessment processes.

We are permitted to omit required disclosures if we believe that the information is immaterial such that omission would be unlikely to change or influence the decision of a reader relying on that information. In addition, we may omit required disclosures where we believe that the information is regarded as proprietary or confidential. In our view, proprietary information is that which, if it were shared, would undermine our competitive position. Information is considered to be confidential where there are obligations binding us to confidentiality with our customers, suppliers and counterparties.

Risk Management

The Firm’s Management determines its business strategy and the level of risk acceptable to the Firm. They have designed and implemented a risk management framework that recognises the risks that the business faces and how those risks may be monitored and mitigated and assess them on an ongoing basis. The Firm has in place controls and procedures necessary to manage those risks.

The Firm considers the following as key risks to its business:

Business risk – This risk represents a fall in assets under management, investment performance or the loss of key staff which may reduce the fee income earned by the Firm and hinder its ability to finance its operations and reimburse its expenses. Business risks are assessed and mitigated as part of the Internal Capital Adequacy Assessment Process (‘ICAAP’).

Market risk – The risk is the exposure to foreign exchange fluctuations due to investment management and performance fees being denominated in currencies other than sterling. The Firm operates currency bank accounts permitting it to receive/pay currency directly. In addition, the Firm can manage such exposure by hedging certain positions.

Operational risk – This risk covers a range of operational exposures from the risk of the loss of the key personnel to the risk of the provision of investment advice. Legal, reputational and business continuity risks are also included within the category of operational risk. Operational risks and how they may be mitigated are assessed as part of the ICAAP.

Credit risk – This risk relates to the exposure to the Funds for non-payment of management and performance fees and counterparty exposure relating to the Firm’s bank balances and any other debtors. Counterparty risk is monitored on an ongoing basis.

Regulatory Capital

The Firm is a Limited Liability Partnership and its capital arrangements are established in its Partnership deed. Its capital contains members’ capital contributions.

The Firm is small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its accounts receivable in foreign currency, and credit risk from management and performance fees receivable from the funds under its management.

Pillar 1 capital is the higher of:

  • the base capital requirement of €50,000;
  • the sum of market and credit risk requirements; or
  • the Fixed Overhead Requirement (‘FOR’).

Pillar 2 capital is calculated by the Firm as representing any additional capital to be maintained against any risks not adequately covered under the requirement in Pillar 1 as part of its ICAAP.

It is the Firm’s experience that its Pillar 1 capital requirement normally consists of the FOR, although market and credit risks are reviewed monthly. The Firm applies a standardised approach to credit risk, applying 8 per cent to the Firm risk weighted exposure amounts, consisting mainly of investment management and performance fees due but not paid, and bank balances. Having performed the ICAAP, the Firm has concluded that no additional capital is required in excess of its Pillar 1 capital requirement.

As at the date of this disclosure the Firm’s regulatory capital position is:

Capital Item £’000
Tier 1 capital 615
Total capital resources, net of deductions 615

The Firm’s ICAAP assesses the adequacy of its internal capital to support current and future activities. This process includes an assessment of the specific risks to the Firm, the internal controls in place to mitigate those risks and an assessment of whether additional capital mitigates those risks. The Firm also considers a wind down scenario to assess the capital required to cease regulated activities.

Concerning Pillar 1, it is the Firm’s experience that the FOR established its capital requirements i.e. the sum of the credit risk and market risk requirements is a lower figure, in part to the limits on the types of risk as detailed above. Our capital requirements are currently £559,000 which is well within the level of regulatory capital held.

We consider this amount to be sufficient regulatory capital to support the business and have not identified any areas which give rise to a requirement to hold additional risk based capital.

The Firm’s ICAAP is formally reviewed by Management annually, but will be revised should there be any material changes to the Firm’s business or risk profile.

Remuneration

Given the nature and small size of our business, remuneration for all employees is set by the Management of the Firm. The Firm formally reviews the performance of all employees and based thereon determines each employees overall level of remuneration and the split of that between base salary, bonus, etc. in compliance with the FCA Rules on remuneration. The Firm also complies with the requirements imposed by the Pensions Regulator in terms of worker pension contributions

Given that the Firm has only one business area, investment management, all remuneration disclosed in our audited financial statements is from this business area.

The Firm is subject to the BIPRU Remuneration Code (‘the Code’), has applied proportionality and, pursuant to this application and where relevant, has disapplied various provisions of the Code.

Stewardship Disclosure

The Firm supports the principles enshrined in the Financial Reporting Council’s Stewardship Code which sets out good practice for investor engagement. The FCA requires all authorised asset managers to publicly disclose either a statement of compliance with the Stewardship Code or where they do not commit, their alternative investment strategy.

The FCA and the Financial Reporting Council have acknowledged that certain aspects of the Stewardship Code are not directly relevant to all managers. The Firm is a fund manager which is currently the delegated portfolio manager of a Luxembourg regulated SICAV (‘SICAV’) and an investment advisor in respect of advised accounts. Consequently, compliance with the Stewardship Code is not relevant to the Firm because:

  • it does not manage or advise on UK listed assets for investors
  • there is no interaction with the management of companies with respect to assets managed or advised by the Firm

The Firm’s Management will continue to review the Code’s applicability.

31 August 2017

0f5e76950b
/wp-admin/options-general.php?page=emc2-popup-disclaimer/emc2pdc-admin.php
ceb35b15c6
980
1
Accept
Decline
http://www.google.co.uk
1

This website is directed only at persons in the United Kingdom and the European Economic Area that qualify as professional clients or eligible counterparties as defined by the Financial Conduct Authority. The information in this website is not intended for the use of and should not be relied on by any person who would qualify as a retail client. If you are uncertain about whether you qualify as a professional client or as an eligible counterparty, you should seek independent advice from your legal and financial advisers.
In the United States, this website is intended only for qualified purchasers as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940, as amended.
Persons resident in jurisdictions other than the UK or US should consult their professional advisers to determine whether there are any restrictions, any requirements for regulatory, governmental or other consent, or any other formalities to be observed to enable them to invest in our investment products.
The information on this website is provided for your general information only and does not constitute the giving of any investment advice or an offer to sell or the solicitation of an offer to buy any product or service by us and must not be relied upon at any time or in any circumstances by anyone entering this website in connection with any investment decision. The information on this website does not constitute a financial promotion for the purposes of the Financial Services and Markets Act 2000 and rules and guidance issued from time to time by the Financial Conduct Authority. The information and material on this website is not for distribution and does not constitute an offer to sell or the solicitation of any offer to buy any securities or any service in any jurisdiction.
Any decision to purchase interests in any Fund described on this website must be based solely upon the information contained in the prospectus of the relevant Fund and subscriptions will only be received and shares issued on the basis of the current prospectus of the relevant Fund; you are referred to this document if further information is required.
No information provided on this website in relation to any product or service should be construed as investment or other advice to you on the suitability or otherwise of that product or service for any person, such suitability depending on all the circumstances of the person concerned and all persons should consult with their own financial and other appropriate professional advisers as to all matters concerning any potential investment or any interest in any investment.
By clicking the ‘ACCEPT’ button below, entering this website and continuing to use it, you represent and confirm that you are a professional client or eligible counterparty as defined by the Financial Conduct Authority, or in the US are a qualified purchaser as defined in Section 2(a)(51) of the U.S. Investment Company Act of 1940, as amended , or that otherwise there are no restrictions in place that prevent you from accessing this website and/or considering any investment products or services detailed therein, and that you agree to be fully bound by the terms and conditions of this Legal Notice and our full terms and conditions of use of our website which you should read before using this website. Please note that you may be required to provide documentary evidence in support of your identity and categorisation as a professional client or eligible counterparty or qualified purchaser where we are considering making a financial promotion to you or we are considering entering into a contract with you as an investor or you are considering making an investment.

SCIO Capital LLP is authorised and regulated by the Financial Conduct Authority.

References to ‘we’, ‘us’, ‘our’, ‘firm’, ‘SCIO’ or ‘SCIO Capital’ mean SCIO Capital LLP. SCIO®, SCIO Capital® and the SCIO logo® are registered trade-marks of SCIO CAPITAL LLP® in the United Kingdom. All rights reserved.

Accept Decline