Investors
Regulatory disclosures

Stewardship Code

Updated March 2019.

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 Financial Conduct Authority 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 to a number of alternative and regulated funds and strategies. Consequently, compliance with the Stewardship Code is not relevant to the Firm because it does not adapt an overall active approach to shareholder participation, except in ESG related matters where the Firm is committed to creating real ESG impact in accordance with the principles of UNPRI.

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

Pillar 3 Disclosure

Updated March 2019

Introduction

Trium Capital LLP (“Trium” or the “Firm”) is a London-based discretionary investment manager to professional clients and unregulated collective investment schemes. The Firm is required to make its Pillar 3 disclosure at least annually, and is made as at the Firm’s Accounting Reference Date. The disclosure may be published on our website or as an appendix to our statutory audited annual accounts. The purpose of this disclosure is to encourage market discipline.

The Capital Requirements Directive (CRD) created a revised regulatory capital framework across Europe covering how much capital financial services firms must retain. In the United Kingdom, rules and guidance are provided in the General Prudential Sourcebook (GENPRU) for Banks, Building Societies and Investments Firms (BIPRU).

The FCA framework consists of three “Pillars”:

Pillar 1 sets out the minimum capital requirements that companies need to retain to meet their credit, market and operational risk;

Pillar 2 requires companies to assess whether their Pillar 1 capital is adequate to meet their risks and is subject to annual review by the FCA;

Pillar 3 requires companies to develop a set of disclosures which will allow market participants to assess key information about its underlying risks, risk management controls and capital position. These disclosures are seen as complimentary to Pillar 1 and Pillar 2.

BIPRU 11 sets out the provisions for Pillar 3 disclosure. The rules provide that companies may omit one or more of the required disclosures if such omission is regarded as immaterial. Information is considered material if its omission or misstatement could change or influence the decision of a user relying on the information. In addition, companies may also omit one or more of the required disclosures where such information is regarded as proprietary or confidential.

The information contained in this document has not been audited, and as such does not constitute any form of financial statement and must not be relied upon.

Firm Overview

Trium is incorporated in the UK and is authorised and regulated by the Financial Conduct Authority (“FCA”) as a Full-Scope Alternative Investment Fund Manager with the Collective Portfolio Management Firm (“CPMI”) designation, which also makes the Firm a BIPRU firm. The Firm is a Solo regulated entity, and as such does not form part of UK Consolidation Group for FCA prudential requirements.

The Governing Body of Trium has management and oversight responsibility.  It generally meets monthly and is composed of:

Mr Robert Dow – Chairman of Trium – CF2

Mr Shenan Dhanani – Co-head of Trium – CF29 & CF30

Mr Donald Pepper – Co-head of Trium – CF29 & CF30

Mr Fredrik Ostlund – Head of Compliance – CF10 & CF11

Mr James Jarvis – Head of Research – CF29 & CF30

Mr Onno de Koster – Head of Risk – CF30

Mr Andrew Collins – Head of UCITS – CF29 & CF30

Mr Richard Hutchinson – Investor Director

The Governing Body is responsible for the entire process of risk management, as well as forming its own opinion on the effectiveness of the process. In addition, the Governing Body decides Trium’s risk appetite or tolerance for risk and ensures that Trium has implemented an effective, ongoing process to identify risks, to measure its potential impact and then to ensure that such risks are actively managed. Senior Management is accountable to the Governing Body for designing, implementing and monitoring the process of risk management and implementing it into the day-to-day business activities of Trium.

Capital Resources and Requirements

Pillar 1

As a limited liability partnership its capital arrangements are as follows: The Firm is a BIPRU Investment Firm without an Investment Firm Consolidation Waiver deducting Material Holdings under (GENPRU 2 Annex 4). Tier 1 Capital comprises of Members’ Capital.

As a CPMI, the Firm is subject to the capital requirements set out in IPRU (INV) Chapter 11 and also BIPRU/GENPRU.  The Firm has the following capital resources:

Members Capital: Tier 1 capital of £3,201,903 

As at 31 December 2018, the Firm’s Pillar 1 capital resource requirement was £1,520,784.

Pillar 2

The Firm has adopted the “Structured” approach to the calculation of its Pillar 2 Minimum Capital Requirement as outlined in the Committee of European Banking Supervisors Paper, 27 March 2006 which takes the higher of Pillar 1 and 2 as the ICAAP capital requirement.  It has assessed Business Risks by modelling the effect on its capital planning forecasts and assessed Operational Risk by considering if Pillar 2 capital is required taking into account the adequacy of its mitigation.

Since the Firm’s Internal Capital Adequacy Assessment Process (ICAAP or Pillar 2) process has not identified capital to be held over and above the Pillar 1 requirement, the capital resources detailed above are considered adequate to continue to finance the Firm over the next year. No additional capital injections are considered necessary. 

Risk Management

The Firm has established a risk management process in order to ensure that it has effective systems and controls in place to identify, monitor and manage risks arising in the business. The risk management process is overseen by the Firm’s members.

As risks are identified within the business, appropriate controls are put in place to mitigate these and compliance with them is monitored on a regular basis. The frequency of monitoring in respect of each risk area is determined by the significance of the risk. The Firm does not intend to take any risks with its own capital and ensures that risk taken within the portfolios that it provides investment services to is closely monitored. Details of the Firm’s risk management systems and controls is reported to the Governing Body.

The Firm has a risk management objective to develop systems and controls to mitigate risk to within our risk appetite, as set-out in our ICAAP. Ordinarily, a firm must disclose its risk management objectives and policies for each separate category of risk. On the basis of materiality, we have omitted those items not relevant to the Firm, however, have provided summary information upon the below listed risk items.

Operational Risk

The Firm places strong reliance on the operational procedures and controls that it has in place in order to mitigate risk and seeks to ensure that all personnel are aware of their responsibilities in this respect.

The Firm has identified a number of key operational risks. These relate to disruption of the office facilities, system failures, trade failures and failure of third party service providers. Appropriate policies are in place to mitigate against risks, including appropriate insurance and business continuity plans.

All Operational Risks assessed are within the Firm’s risk appetite.  It is therefore considered that, in normal circumstances, should any of these Operational Risks materialise, the impact and resultant expense would be managed within the business. On this basis, the Firm has not allocated any additional Pillar 2 capital to be allocated to any specific risks.

Credit Risk

The main credit risk to which the Firm is exposed is in respect to the failure of its debtors to meet their contractual obligations. The majority of the Firm’s receivables is related to its investment management activities. The Firm believes its credit risk exposure is limited since the Firm’s revenue is ultimately related to management fees received from funds, which are drawn throughout the year from the funds managed. Other credit exposures include bank deposits and office rental deposits. The Firm undertakes periodic impairment reviews of its receivables. All amounts due to the Firm are current and none have been overdue during the year.

The Firm has adopted the standardised approach to credit risk, and therefore follows the provision within BIPRU 3 standardised credit risk of the FCA handbook. The Firm applies a credit risk capital component of 8% to its non-trading book risk weighted exposure. As the Firm does not make use of an external credit rating agency, it is obligated to use a risk weight of 100% to all non-trading book credit exposures, except cash and cash equivalents which are held by investment grade firms and currently attract a risk weighting of 20%. The Firm has excluded disclosure of its Credit risk calculation on the basis that it is not material.

The Firm neither holds client money nor assets, nor lends money and does not deal on its own account and is, therefore, not exposed to Credit Risk in its traditional sense.  The Firm’s exposure to Credit Risk is the risk that investment management and advisory fees cannot be collected and the exposure to banks where surplus funds may be deposited.  The Firm’s Credit Risk appetite is low, so the Firm holds surplus funds in cash with banks assigned high credit ratings.  Credit Risk, for the purpose of Pillar 2, is assumed to be that calculated at Pillar 1.

Market Risk

The Firm is not exposed to Market risk, since the Firm holds no trading book positions on its own account, and all bank accounts are in GBP and all fee income is in GBP. Accordingly, the Firm has excluded disclosure of its Market risk calculation on the basis that it is not material.

Money Laundering Risk

The Firm’s money laundering risk appetite is low.  To manage the risk to this level, the Firm has in place a number of policies and procedures.  Training is also provided annually to all staff.  Where the Fund administrator performs the ongoing money laundering programme, the Firm carries out an annual on-site due diligence visit and on a sample basis reviews client files.  With regard to managed accounts, money laundering checks are performed at on-boarding and at least annually thereafter.

Liquidity risk

With respect to its designated investment business (excluding managing AIFs and UCITS), the Firm is subject to the FCA’s Liquidity Rules at BIPRU 12 on a solo basis.  The Firm is classified as a Non-ILAS Firm and, hence, is subject to the Overall Liquidity Adequacy Rule (BIPRU 12.2.1) and considered liquidity systems and controls which include the management of Liquidity Risk via scenario and stress testing of the Firm’s cash flow forecast and the establishment of management actions and contingency funding plans.  

Remuneration Code

Trium Capital LLP (herein “TCL”) has adopted a remuneration policy and procedures that comply with the requirements of chapter 19B (AIFMD activities), chapter 19C (MiFID activities) and chapter 19E (UCITS activities) of the FCA’s Senior Management Arrangements, Systems and Controls Sourcebook (“SYSC”), to the extent to which they apply. 

TCL has also considered ESMA’s Guidelines on sound remuneration policies. The Firm has also considered all the proportionality elements in line with the FCA Guidance. 

The Firm has assessed the proportionality elements and does not apply the Pay Out Rules. Furthermore, the Firm has concluded, on the basis of its size and the nature, scale and complexity of its legal structure and business that it does not need to appoint a separate remuneration committee. Instead, the Firm’s Governing Body sets, and oversees compliance with, the Firm’s remuneration policy including reviewing the terms of the policy at least annually.

Code Staff Remuneration

Senior management and members of staff whose actions have a material impact on the risk profile of TCL are classified as Code Staff. The below table shows the number of Code Staff in each business area. 

Type of Remuneration Code Staff Number of Code Staff

Senior Management: 6

Other Remuneration Code staff*: 13

Total Fixed Remuneration of Code Staff: £1,985,000

Total Variable Remuneration of Code Staff: £207,500

The above remuneration disclosure includes remuneration paid to Code Staff in respect to both their AIFMD and non-AIFMD activities.

* Other remuneration code staff includes staff members whose professional activities can exert material influence on the firm’s risk profile or on an AIF managed by the firm.

As of March 2019

TCL has made no omissions on grounds of data protection. For further information please contact: Email: compliance@trium-capital.com

MiFID II

What are MiFID and MiFID II?

Prompted by changes in the way financial markets operate, in 2007 the European Commission introduced the Markets in Financial Instruments Directive (MiFID) with the aim of creating a level playing field in the European Economic Area (EEA).

The further MiFID II reforms, effective from January 2018, mean that organised trading of financial instruments had to move to multilateral and regulated trading platforms or be subject to transparency requirements where traded over-the-counter (OTC). Strict transparency rules also ensure that dark trading of shares and other equity instruments which might undermine efficient and fair price formation are no longer allowed.

Best Execution

Under MiFID and MiFID II, with effect from 3 January 2018, Trium Capital LLP is required to take sufficient steps to obtain the best possible result for its clients when executing orders on their behalf. In order to detail our approach, we include below the Trium Best Execution Policy that complies with this MiFID II obligation.

MiFID II stipulates that we act in the best interests of clients when providing execution services and maintain monitoring arrangements that demonstrate compliance. Trium must also make disclosures to allow clients to make informed choices between competing dealers by publishing reports (under RTS 28) on execution venue selection.

Trium Best Execution Policy – February 2019

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