MIFIDPRU 8 Disclosure
Juniper Partners Limited (“Juniper” or the “Company”) is authorised and regulated by the Financial Conduct Authority (the “FCA”). The Company is a full-scope UK Alternative Investment Fund Manager (“AIFM”) and also has permissions to conduct certain Markets in Financial Instruments Directive (“MiFID”) activities. The Company is therefore a Collective Portfolio Management Investment ("CPMI") firm.
As such, Juniper is subject to the FCA’s MIFIDPRU rules.
Given the Company’s size, internal organisation and the nature, the scope and the complexity of its activities, it is classified under MIFIDPRU as a Small Non-Interconnected firm (“SNI Firm”). The Company does not have any additional tier 1 instruments in issue and, accordingly, MIFIDPRU Chapter 8 requires the Company to disclose information regarding its remuneration policies and practices.
Unless otherwise stated, all figures are as at the Company’s most recent 30 April financial year-end, covering the period from 1 May 2022 to 30 April 2023.
Remuneration Policy and Practices (MIFIDPRU 8.6)
As a SNI Firm, Juniper is subject to the basic requirements of the MIFIDPRU Remuneration Code. However, as an alternative investment fund manager, Juniper is also classified as a CPMI firm and so subject to the AIFM Remuneration Code.
The purpose of the requirements on remuneration are to:
· promote effective risk management in the long-term interests of the Company and its clients;
· ensure alignment between risk and individual reward;
· support positive behaviours and healthy Company cultures; and
· discourage behaviours that can lead to misconduct and poor customer outcomes.
The objective of Juniper’s remuneration policies and practices are to establish, implement and maintain a culture that is consistent with, and promotes, sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profile of the Company and the services that it provides to its clients.
In addition, Juniper recognises that remuneration is a key component in how the Company attracts, motivates and retains quality staff and sustains consistently high levels of performance, productivity and results. As such, the Company’s remuneration philosophy is also grounded in the belief that its people are the most important asset and greatest competitive advantage. Juniper is committed to excellence, teamwork, ethical behaviour and the pursuit of exceptional outcomes for its clients.
From a remuneration perspective, this means that performance is determined through the assessment of various factors that relate to these values, and by making considered and informed decisions that reward effort and attitude.
Characteristics of the Company's Remuneration Policy and Practices
Remuneration at Juniper is made up of fixed and variable components.
Fixed: The fixed component is set in line with market competitiveness at a level to attract and retain skilled staff. Salaries are normally reviewed annually.
Variable: Variable remuneration is paid on a discretionary basis (being determined by the Company's Board) and takes into consideration the Company’s financial performance as well as the non-financial performance of the individual in contributing to the Company’s success. All staff members are eligible to receive variable remuneration.
The fixed and variable components of remuneration are considered to be appropriately balanced. The fixed component is designed to represent a sufficiently high proportion of the total remuneration to enable the operation of a fully flexible policy on variable remuneration. This allows for the possibility of paying no variable remuneration component, which the Company would do in certain situations, such as where the Company’s profitability performance is constrained, or in the unlikely event where there is a risk that the Company may not be able to meet its regulatory capital or liquidity requirements.
Governance and Oversight
Given the size, internal organisation and the nature, scope, and complexity of the activities of the Company it does not have a Remuneration Committee. The remuneration policy is therefore the responsibility of the Company's Board as a whole.
The Company's Board is responsible for setting and overseeing the implementation of Juniper's remuneration policy and practices. In order to fulfil its responsibilities, the Board:
· is appropriately staffed to enable it to exercise competent and independent judgement on remuneration policies and practices and the incentives created for managing risk, capital, and liquidity;
· ensures that the Company’s remuneration policy and practices take into account the long-term interests of the Company's shareholder(s) and other stakeholders in the Company; and
· ensures that the overall remuneration policy is consistent with the business strategy, objectives, values, and interests of the Company and of its clients.
The Company's remuneration policy and practices are reviewed annually by the Board.
Quantitative Remuneration Disclosure
For the financial year to 30 April 2023, the total amount of remuneration awarded to all staff was £2,246,000, of which £2,077,000 comprised the fixed component of remuneration, and £169,000 comprised the variable component.
Pillar 3 Disclosures
FRN: 61354624 June 2020
PATAC Limited (the “Company”) is authorised and regulated in the UK by the Financial Conduct Authority (the “FCA”) and is classified as a Collective Portfolio Management Investment Firm ("CPMI") and a BIPRU firm.
The Pillar 3 disclosure requirement stems from the UK’s implementation of the Capital Requirements Directive ("CRD") which represents the European Union’s application of the Basel Capital Accord. The CRD introduced consistent capital adequacy standards and an associated supervisory framework in the EU. The CRD is implemented in the UK by the FCA and consists of three ‘pillars’:
- Pillar 1 - This specifies the minimum capital requirements which the Company is required to hold to cover business (credit, market and operational) risks;
- Pillar 2 - This sets out the supervisory review process to be used to assess whether additional capital should be held against risks not covered by Pillar 1.
- Pillar 3 - This specifies the disclosure requirements which the Company is required to make and is designed to promote market discipline by providing market participants with key information on a company’s risk exposures and risk management processes.
The Company is a Full Scope UK Alternative Investment Fund Manager ("AIFM") pursuant to the Alternative Investment Fund Managers Directive ("AIFMD") and the FCA's adopting legislation. The Company also undertakes additional activities which result in the Company being a BIPRU firm. The Company is also required to meet AIFMD capital requirements and disclosure obligations.
The disclosures below are the required Pillar 3 disclosures for the Company. The disclosures do not apply to the Funds managed by the Company, which are exposed to different risks.
This disclosure is prepared on the basis that the Company is a BIPRU firm subject to the FCA regulations for the disclosures required under Pillar 3 contained in the Prudential Source book for Banks, Building Societies and Investment Firms (“BIPRU”). Further information on BIPRU can be found on the FCA website (www.fca.gov.uk). These rules allow each firm to exclude disclosures where the information is regarded as immaterial, proprietary or confidential. Disclosures have been made in this document in compliance with BIPRU 11 unless that disclosure has been regarded by the Company as being immaterial, proprietary or confidential. Additional information is available from Hannah Williamson, the Company’s compliance officer.
The Company is a subsidiary of Personal Assets Trust plc. For the purposes of the CRD the Company is not consolidated with its parent. There are no current or foreseen practical or legal impediments to the prompt transfer of capital resources or repayments of liabilities between the parent undertaking and the Company.
II. RISK MANAGEMENT OBJECTIVES AND POLICIES
The Company maintains a clear delineation between portfolio management and risk management teams which are functionally and hierarchically separated. The members of the risk function consider the Company’s risk appetite to ensure that the Company’s risk management framework is appropriately designed and implemented. The Company’s risk function meet on a regular basis to discuss and identify any potential risks that the Company faces and will report periodically to the full Board.
The risk management procedures for the Company reflect the business and regulatory requirement to manage a number of different categories of risk. These risks include operational, business, market, credit, insurance and liquidity risk. In respect of this disclosure the first four of these risks are most relevant and further information on these is below.
Operational risk is overseen by the risk function. The Company maintains a detailed risk map that identifies the key risks faced by the Company and the mitigating factors and controls that address these risks. Each risk is assigned a level of impact and probability of either high, medium or low. The Company aims to ensure that there are sufficient mitigating factors and controls to ensure that the net probability of each risk is low. The risks map is reviewed and approved by the Company’s risk committee regularly.
The Company has identified the key business risks as principally taking the form of a loss of clients or the loss of key staff which may reduce the fee income earned and hinder its ability to meet its expenses. To mitigate business risks, the Company periodically models various different economic scenarios to assess the potential impact that these would have on the Company’s financial position. The exposure to these business risks is to some extent mitigated by having (i) different income streams (ii) appropriate staff retention policies and (iii) are relatively broad client base.
Market risk is limited and not material although as an asset management business, the portfolios managed are subject to market risk. The Company's fees are linked to assets under management and so revenues are affected by rises and falls in markets. However, there is a minimum fee structure to mitigate the risk of the Company being unable to meet its liabilities as they fall due. There is a focus on cost control and operational expenses are kept low.
The Company’s exposure to credit risk is principally the risk that investment management fees cannot be collected and the exposure to banks where collected fees are deposited.
III. CAPITAL RESOURCES
The Company is not required to calculate an operational risk charge for its Pillar 1 requirement under applicable exemptions. As a Collective Portfolio Management Investment Firm, the Company’s minimum capital requirement under Pillar 1 and BIPRU is therefore the greatest of:
- the base capital requirement of €50,000;
- the sum of its market and credit risk requirements; and
- its fixed overhead requirement.
In practice, the fixed overhead requirement is the greatest and therefore establishes the Company’s minimum capital requirement under Pillar 1. However, the Company is also required to meet AIFMD capital requirements and disclosure obligations as applicable to an AIFM under IPRU (INV). As the AIFMD capital requirements are greater than the BIPRU requirements, these are the capital requirements which the Company must adhere to.
The basic requirement is that as an AIFM the Company must have an initial capital of at least the higher of (i) €125,000 plus 0.02 per cent of the portfolio of relevant AIFs under management over €250m (subject to a cap of €10 million) and (ii) one quarter of the company’s relevant fixed expenditure. AIFMs must further either have professional indemnity insurance or have additional own funds appropriate to cover risks arising from professional negligence.
The Company has assessed its capital requirement as being £709,000. As at 30 April 2020 theCompany has capital as follows:
Tier 1 capital less innovative tier 1 capital
Total of tier 2, innovative tier 1 and tier 3 capital
Deductions from tier 1 and tier 2 capital
Total capital resources, net of deductions
The Company assesses the adequacy of its capital through its Internal Capital Adequacy Assessment Process. As part of this process, the Company assesses all known risks, including operational and business risks, and performs stress and scenario tests to determine whether the level of capital that the Company holds is adequate to support its current and future activities. Following this analysis, it is the Company’s opinion that no additional capital is currently required.
The Company does not hold any equities, does not have a trading book and does not undertake any form of securitisation.
The Company’s capital resources requirement consists of its funds under management plus professional negligence requirement and not the total of the credit risk and market risk requirements. Therefore disclosures relating to credit and market risk are considered to be immaterial.
IV. REMUNERATION POLICY
The following remuneration policy is prepared in accordance with the Alternative Investment Fund Managers’ Directive (“AIFMD”), the European Commission Delegated Regulation supplementing the AIFMD (“Delegated Regulation”), the “Guidelines on sound remuneration policies under the AIFMD” issued by the European Securities and Markets Authority and the Financial Conduct Authority (“FCA”) Handbook SYSC 19B: The AIFM Remuneration Code, and FUND 3.3(5). The current policy applies from 1 May 2015 being the start of the first financial year following the Company’s authorisation as an Alternative Investment Fund Manager (“AIFM”).
The Company has chosen to disapply the 'pay-out process rules' on the basis of its small size, relatively straightforward internal organisation and the nature/complexity of the activities undertaken.
The Remuneration Committee of the parent company, Personal Assets Trust plc, is responsible, in conjunction with the Company’s Board, for reviewing the remuneration package of all executive Directors and members of staff each year. Given the size and nature of the Company, it does not have a separate remuneration committee. It is intended that the remuneration package is sufficient to attract and retain employees of appropriate calibre to provide the Company’s clients (including the parent company) with a high quality of service.
The remuneration model for all staff includes a basic salary and a defined contribution pension scheme. The Company makes contributions to the pension scheme up to 13 1/3 percent of salary.
There are no variable elements of remuneration dependent upon the performance of the Company or the Company’s clients (including the clients for whom it acts as AIFM), however discretionary cash bonuses may be paid. These bonuses may be paid to reward exceptional individual performance or successful professional examination progress. In accordance with SYSC 19B, other than in extraordinary circumstances, these cash bonuses will not be more than 1/3 of total remuneration.
The Company believes that this remuneration approach is consistent with and promotes sound and effective risk management and does not encourage risk-taking which is inconsistent with the risk profiles of the AIFs it manages.
The Company will work to ensure that any variable remuneration is not paid through vehicles or methods that facilitate the avoidance of any applicable requirements of the AIFMRemuneration Code.
AIFM Remuneration Code Staff
The Board consider that all senior staff (of which there are currently six) are AIFM Remuneration Code Staff being staff whose professional activities have a material impact on the risk profiles of the AIFM or of the AIFs the AIFM manages. This includes senior management, risk takers, control functions, and any employees receiving total remuneration that takes them into the same remuneration bracket as senior management and risk takers.
All Remuneration Code Staff have been informed of their status as such and have been briefed on the implications of the requirements of the AIFM Remuneration Code.
Quantitative Remuneration Disclosures
The appropriate disclosures required in accordance with FUND 3.3.5, Article 22(2) (e) and22(2) (f) of the AIFMD and Article 107 of the Delegated Regulations, are available on request from: The Compliance Officer, PATAC Limited, 21 Walker Street, Edinburgh, EH3 7HX.
This policy (including the general principles of the policy) will be reviewed at least annually by the Company.