1. INTRODUCTION AND CONTEXT

The Investment Firms Prudential Regime (IFPR) is the FCA’s new prudential regime for MiFID investment firms which aims to streamline and simply the prudential requirements for UK investment firms. IFPR came into effect on 1st January 2022, and its provisions apply to Ramek Asset Management Ltd (the ‘firm’ or ‘Ramek’) as an FCA authorised and regulated firm.

The public disclosure requirements of IFPR are set out in MIFIDPRU 8, replacing the previous Pillar 3 requirements under Capital Requirements Regulation.

Ramek is classified as a non-SNI MIFIDPRU investment firm with a permanent minimum requirement (PMR) of £750k.

Under MIFIRPU 8 the firm is required to make the following disclosures in respect of the following areas:

  • Governance arrangements (MIFIDPRU 8.3);
  • Risk Management (MIFIDPRU 8.2);
  • Own Funds (MIFIDPRU 8.4);
  • Own Funds Requirements (MIFIDPRU 8.5); and,
  • Remuneration Policy and Practices (MIFIDPRU 8.6).
  1. Governance
    • Overview of Governance Arrangements
    • Management Body

Overall governance and oversight of risk management is the responsibility of the firm’s Director. Due to the limited size, scale and complexity of the firm no additional sub committees have been established.

The firm currently has one Director with the following responsibilities:

  • Responsibility for the firm’s performance of its obligations under the senior managers regime
  • Responsibility for the firm’s performance of its obligations under the employee certification regime
  • Responsibility for the firm’s obligations in relation to individual conduct rules for:
    • training; and
    • reporting
  • Strategy formulation and execution
  • Financial control and Accountancy
  • Data Protection and Business Continuity
  • Overall responsibility for the firm’s policies and procedures for countering the risk that the firm might be used to further financial crime
  • Oversight of firm’s overall operations, systems and controls
  • Information Technology

The firm has not established a risk committee, as Ramek is not required to do so under MIFIDPRU 7.3.1.

  • Diversity

The firm has not established a formal diversity policy; however, Ramek is committed to promoting inclusion and diversity across the firm.

  • Other Directorships

The Director of the firm holds no other Directorships.

  1. RISK MANAGEMENT
    • Approach to Risk Management

The firm’s risk management framework is designed to identify the risks that the firm is exposed to, articulating the risk, the impact if the risk were to crystallise, and the likelihood of it doing so. Where systems and controls are required to be enhanced, an action plan is in place and open issues are expected to be dealt with in a timely manner.

The Director are responsible for the risk management framework, including identifying risks, assessing materiality, and determining how risks are managed, monitored and reported.  The firm’s material risks and harms assessment is reviewed at least annually by the Director, within which risks and potential harms are identified, unmanaged impact and materiality estimated, controls and mitigations listed, resulting in post-management impact and materiality estimates for management review.

Any material changes to the firm’s circumstances are reviewed by the Director at least quarterly, or more frequently if required.  If these changes require a review of the potential risks and harms, then the Director will update the assessment based upon the new circumstances.

  • Risk Appetite setting

The Director sets the firm’s business objectives and strategy. The firm’s risk appetite sets out the level of risk that the firm is willing to accept to pursue these objectives. These appetites are reviewed annually by the Director, or more often if required, as part of the ICARA process.

  • Key Risks

Through the firm’s ICARA process the Director consider the key risks and harms posed by Asor Ridge’s business activities and assess the impact of these risks on the firm’s own funds and liquidity requirements – as well as considering the impact of any potential concentration risks.

The key risks and sources of harm considered as part of this process are:

  • Business continuity – The risk that disruption and inability for the firm to carry out its normal operations at its usual place of business could lead to the firm being unable to service its clients. The firm has implemented cloud based data storage and all staff are able to work remotely – enabling the firm to operate from an alternative location.
  • Counterparty Failure – the risk that a counterparty to a transaction fails and one side of a transaction therefore fails to settle. This risk is managed by the firm’s settlement team which operates a strong internal control system. Further counterparties are all institutional clients, helping to reduce this risk exposure.
  • Cyber Risk – The risk of business disruption caused by cyber crime. This risk is managed through robust IT security measures including firewalls and anti virus software.
  • AML/KYC Risk – The risk of a failure in the firm’s AML process when onboarding clients. The firm has clear policies for client onboarding including KYC checks and PEP and Sanction screening.
  • Key Person Risk – Given the size of the firm there is the risk that its operations depend on the presence of a limited number of individuals. Key staff are invested in the business and the firm has considered potential short term actions which could be implemented to cover absences.
  • Governance Risk – Governance failings could impact a wide range of business processes. The firm has experienced senior managers, third party compliance support and a robust compliance monitoring framework.
  • Regulatory Change – The risk that the firm fails to keep pace with regulatory change. The firm, in conjunction with its advisers, undertakes horizon scanning to ensure that it remains ahead of upcoming regulatory changes which will impact the business.
  • Approach to assessing the effectiveness of the Risk Management Function

As part of the firm’s annual ICARA review the Director reviews the firm’s approach to managing risk is operating as intended and provides sufficient real time granularity of the firm’s exposures compared to its appetites.

  1. OWN FUNDS
    • Composition of Own Funds
  Item Amount (GBP) Source based on referencenumbers/letters of the balance sheet in the audited financial statements
1 OWN FUNDS 360,522
2 Tier 1 Capital 360,522
3 Common Equity Tier 1 Capital 360,522
4 Fully paid-up capital instruments 360,522
5 Share premium –
6 Retained earnings –
7 Accumulated other comprehensive income –
8 Other reserves –
9 Adjustments to CET1 due to prudential filters –
10 Other funds –
11 (-) TOTAL DEDUCTIONS FROM COMMON EQUITY TIER 1 –
19 CET1: Other capital elements, deductions, and adjustments –
20 Additional Tier 1 Capital –
21 Fully paid up, directly issued capital instruments –
22 Share premium –
23 (-) TOTAL DEDUCTIONS FROM ADDITIONAL TIER 1 –
24 Additional Tier 1: Other capital elements, deductions, and adjustments –
25 Tier 2 Capital –
26 Fully paid up, directly issued capital instruments –
27 Share premium –
28 (-) TOTAL DEDUCTIONS FROM TIER 2 –
29 Tier 2: Other capital elements, deductions, and adjustments –
  • Reconciliation to audited financial information

The table below shows a reconciliation with own funds in the balance sheet where assets and liabilities have been broken down by asset and liabilities classes respectively. The information in the table below reflects the balance sheet in the audited financial statements.

Own funds: reconciliation of regulatory own funds to balance sheet in the audited financial statements
Balance sheet as inpublished/audited financial statements Under regulatory scope of consolidation Cross reference to Composition of own funds table
31/12/2023 31/12/2023
Assets – Breakdown by asset classes according to the balance sheet in the audited financial statements
1 Tangible assets 500,030 –
2 Debtors 18,453 –
3 Cash at bank 155,227 –
Total Assets 673,710 –
Liabilities – Breakdown by liability classes according to the balance sheet in the audited financial statements
1 Amounts falling due within one year 243,884 –
2 Amounts falling due after one year 69,304
Total Liabilities 313,188 –
Capital
1 Share Capital 75,000 –
2 Current year earnings -58,614
3 Retained Earnings 344,136 –
Total Equity 360,522 –
  • Main features of the firm’s own funds instruments

The firm’s own funds are comprised solely of Common Equity Tier 1 instruments.

  1. OWN FUNDS REQUIREMENT

The firm’s own funds requirement is broken down as follows (as at 31st December 2023):

REQUIREMENT £’s
Fixed Overhead Requirement 31,961
Total K-Factor Requirement 14,634
PMR 190,000
Own Funds Requirement 190,000
  • Overall Financial Adequacy

The overall financial adequacy rule determines that a firm must do both of the following:

  • Have appropriate systems and controls in place to identify, monitor and, where proportionate, reduce all potential material harms that may result from the ongoing operation of its business or winding down its business.
  • Hold financial resources that are adequate for the business it undertakes.

In order to ensure the above, Ramek has carried out the ICARA process to determine the above risks of carrying out business, and then quantifying this to determine additional capital and liquidity required to mitigate against any potential sources of harm.

  1. Remuneration
    • Qualitative Disclosures
      • Overview

The firm’s Director is the only employee of the firm (as defined under SYSC19G). As members of senior management these individuals are considered to be Material Risk Takers.

The Director of the firm is not eligible for fixed drawings nor variable remuneration. Ramek’s Director is entitled to any residual profits of the Directorship. The firm has concluded that, in line with the guidance in SYSC 19G.4.4 (1)(a) these payments do not constitute remuneration.

As such the firm pays no remuneration to employees, either fixed or variable.

  • Incentives, Performance Criteria, and types of Remuneration

Currently the firm does not make any payments classified as remuneration.

In the event this changes in future the firm will ensure that its remuneration practices will incentivise employees to act in a manner that is consistent with the long-term interests and objectives of the business and its clients, and will include an appropriate balance between fixed and variable remuneration.

In the unlikely the event the firm would consider offering non-standard forms of variable remuneration (e.g. severance pay or guaranteed variable remuneration) this would be driven by changing market conditions, the need to attract new talent or develop new business lines as well as considerations in respect of talent retention.

  • Governance

Ramek’s Director are responsible for providing oversight in respect of the firm’s remuneration practices and is responsible for reviewing and approving the remuneration policy on an annual basis – supported by advice provided by the firm’s compliance consultants.

Due to the limited size, scale and complexity of the firm a Remuneration Committee has not been established.

  • Quantitative Disclosures

During the year no remuneration payments have been made including:

  • Fixed remuneration
  • Variable remuneration
  • Severance payments; or,
  • Guaranteed variable remuneration.