Disclaimer

The contents of this website have been prepared by Ekins Guinness LLP (“Ekins Guinness” or “the LLP”) using sources believed to be reliable and accurate but which cannot be warranted as to accuracy or completeness. Information and opinions are subject to change without notice.

Ekins Guinness LLP is authorised and regulated in the conduct of investment business by the Financial Conduct Authority (“FCA”).

Ekins Guinness provides investment research for information purposes and investment management services only to professional customers. Under no circumstances is the content of this website intended to be or to be relied upon as constituting personal investment advice or construed as any offer, or any solicitation of any offer, to buy or sell investments. Whilst all reasonable care has been taken to ensure that research published by Ekins Guinness is not untrue or misleading at the time of publication, neither Ekins Guinness nor its officers or employees makes any representation or warranty as to the accuracy or completeness of such materials. No liability is accepted for any loss whether direct or indirect, incidental or consequential, arising out of any of the research or any information on this website not being true and accurate. All information on this website is believed to be correct and accurate at the time it is posted but is subject to variation without notice.

Partners or employees of Ekins Guinness may have or have had interests or long or short positions in the relevant securities or related financial instruments discussed in Ekins Guinness publications.

The value of shares and other investments and the income derived from them may go down as well as up, and you may not get back the full amount you originally invested. Derivatives in particular are high risk investment instruments which carry a contingent liability, the value of which may be affected by a greater proportion than the change in the value of the underlying investment or asset. If you make an investment in securities that are denominated in a currency other than your own you are warned that changes in rates of foreign exchange may have an adverse effect on the value, price or income of the investment in your own currency. Any persons in doubt as to whether the investments referred to in our research material may be suitable for them, should consult an independent financial adviser.

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Capital Requirements Directive

The Capital Requirements Directive (“the Directive”) of the European Union created a revised regulatory framework across Europe, governing how much capital must be retained by financial services firms. In the United Kingdom the Directive is implemented by the FCA which has created rules and guidance, set out in the General Prudential Sourcebook (“GENPRU”) and the Prudential Sourcebook for Banks, Building Societies and Investment Firms (“BIPRU”), which are volumes of the FCA Handbook.

The regulatory capital framework consists of three ‘Pillars’:

  • Pillar 1 sets out the minimum capital requirements that firms need to retain to meet credit, market and operation risks;
  • Pillar 2 requires firms, and the FCA, to take a view on whether they need to hold additional capital against firm-specific risks not covered by Pillar 1; and
  • Pillar 3 requires firms to develop a set of disclosures which will allow market participants to assess key information about underlying risks, risk management controls and capital position.

This document constitutes the public disclosure which the LLP is required to make under Pillar 3, and fulfils our responsibilities as set out for UK firms in Chapter 11 of BIPRU. The rules allow omission of one or more of the required disclosures if the relevant information is immaterial. Materiality is based on the criterion that omission or misstatement of any information would be likely to change or influence the decision of a reader relying on the information. In addition, the rules allow firms to omit certain listed items, also on grounds of materiality, where their activities are limited; and on this basis we have restricted our disclosure about the LLP to matters concerning the LLP’s current activities, namely discretionary investment management and research to professional clients and dealing with eligible counterparties.

Firms are also permitted to omit one or more of the required disclosures where they believe that the information is proprietary or confidential. The LLP’s view of proprietary information is that, if it were shared, it would undermine the LLP’s competitive position. Information is treated as confidential where there are obligations requiring confidentiality with our customers, suppliers and/or counterparties. Where we have omitted information under this permission we have so declared in the relevant section with reasons.

Risk management

The Partners of the LLP determine the company’s business strategy and risk appetite and accordingly design and implement a risk management framework which recognises the risks which the LLP faces. They also determine how those risks may be mitigated and assess on an ongoing basis their arrangements to manage those risks. The Partners meet on a regular basis and discuss current projections for profitability and regulatory capital management, business planning and risk management. The Partners manage the LLP’s risks through a framework of policy and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim of operating a defined and transparent risk management framework. These policies and procedures are updated as required.

The LLP is small, with an operational infrastructure appropriate to its size. It carries no market risk, other than foreign exchange risk on any of its own assets which might be receivable in foreign currency, and credit risk from management fees receivable. However the LLP may also have investments which attract credit risk. The LLP follows the standardised approach to market risk and credit risk.

Capital Requirements Directive: Pillar 3 Disclosure

The firm is categorised for regulatory purposes as a BIPRU 50k limited licence firm and as such its capital requirements are the greater of:

  • Base Capital Requirement of €50,000; or
  • The sum of its Market Risk and Credit Risk Requirements; or
  • Its Fixed Overhead Requirement.

It is the Company’s experience that the FOR satisfactorily establishes its capital requirements. The Company has not omitted any relevant disclosures on grounds of confidentiality. There is sufficient surplus of total capital resources over the FOR, but for commercial reasons we do not declare the amount of the FOR.

Pillar 2 (ICAAP) Capital Requirements

The adequacy of the capital held by the LLP is assessed as part of the Individual Capital Adequacy Process (“ICAAP”) and is subject to formal approval by the Partners. From this process the Partners have resolved under Pillar 2 of the Directive to maintain additional capital above the level of the FOR, purely as a precaution, should the deemed capital required to wind up the LLP exceed its FOR.

Remuneration Code

The LLP is subject to the Remuneration Code for BIPRU firms. The LLP applies the FCA’s rules on proportionality as provided under BIPRU which allows the Partners to adopt a simplified approach to the code. The remuneration of Partners is established under the LLP Agreement.

UK Stewardship Code

The Financial Reporting Council (“FRC”) has issued a Stewardship Code for institutional investors with seven principles of good practice. The Stewardship Code states that institutional

investors should:

  1. Publicly disclose their policy on how they will discharge their stewardship responsibilities
  2. Have a robust policy on managing conflicts of interest in relation to stewardship and this policy should be publicly disclosed
  3. Monitor their investee companies
  4. Establish clear guidelines on when and how they will escalate their activities as a method of protecting and enhancing shareholder value
  5. Be willing to act collectively with other investors where appropriate
  6. Have a clear policy on voting and disclosure of voting
  7. Report periodically on their stewardship and voting activities

The LLP broadly supports the aims and the seven principles of the Stewardship Code, which are generally in line with the LLP’s existing policies. However, where the LLP adopts an entirely systematic investment methodology, the LLP has decided not to exercise its right to vote with respect to investee companies.

Conflicts of Interest Policy

Conflicts of interest can arise where:

  • the interests of the LLP conflict with those of a client (firm vs. client conflicts);
  • the interests of one client of the LLP conflict with those of another of our clients (client vs. client conflicts).

In accordance with the FCA Principles for Businesses, the requirements of the European Markets in Financial Instruments Directive (“MiFID”), and with our fiduciary obligations, the LLP has policies and arrangements in place to identify and manage conflicts of interest that may arise between us and our clients or between our different clients. These are available to clients on request.

Confidential information

Unpublished price-sensitive information: during the course of the LLP’s business activities in connection with the making, monitoring and realisation of investments held or dealt in on behalf of certain clients, there may be occasions when directors and employees of the LLP become aware of unpublished price sensitive information concerning listed securities. In the United Kingdom, the release of or acting upon unpublished price-sensitive information (insider dealing) is a criminal and civil offence and is strictly prohibited by law and by the LLP’s insider dealing policies.

Commercially sensitive information: similarly, the LLP’s business activities may cause directors and employees of the LLP to become aware of information that could affect the commercial interests of certain third parties involved in a transaction. Where the LLP receives such confidential information under the terms of a confidentiality agreement, it has a duty to keep that information confidential.

Record Keeping

The LLP maintains records of actual and potential conflicts and the procedures in place to manage them in accordance with its regulatory obligations.

Notice

In providing a set of principles through which the LLP intends to manage any potential conflicts of interest, we intend that this document should be for guidance only. Accordingly, this document is being provided (to the extent permitted by law) without liability, and in publishing this document the LLP makes no representation or warranty as to how it may act in connection with any particular situation or set of circumstances that may arise in relation to a conflict. This document is not intended to create third party rights or duties that would not already exist if the policy had not been made available, nor is it intended to form part of any contract between the LLP and any client.

© Ekins Guinness LLP 2018. All rights reserved. No part may be reproduced or distributed in any manner without written permission from Ekins Guinness. Ekins Guinness specifically prohibits redistribution via the internet or otherwise, and accepts no liability whatsoever for the actions of third parties in this respect.