Introduction
Monument Group Europe LLP (”MG UK”, or the “Firm”) is a MiFID investment firm authorised and regulated by the Financial Conduct Authority (FCA). The Firm is required to comply with the disclosure requirements under the Investment Firms Prudential Regime (IFPR), which is set out in the FCA Handbook MiFIDPRU 8. This supersedes the previous Pillar 3 disclosure.
For the purpose of prudential regulations, MG UK is classified as an SNI (small and non-interconnected) firm and is subject to the basic MiFIDPRU requirements. The Firm is required to provide a level of detail in its disclosures that is appropriate to both the Firm’s size and internal organisation as well as the nature, scope, and complexity of its activities.
Risk Management
The Firm’s Governing Body has the ultimate responsibility for the development of appropriate strategies, systems, and controls for the management of risks within the business. The members of the Governing Body possess a wide range of skills, with an appropriate emphasis on each of compliance, risk and technology alongside the Firm’s general investment management objectives. The Governing Body is ultimately responsible for instilling an appropriate risk culture within the Firm, aligning risk with the business strategy, defining the Firm’s risk appetite and approving risk policies and infrastructure. The Governing Body has decided that the Firm’s overall appetite for risk in business operations is low and it encourages all staff to identify, escalate and minimise risks as much as possible. The Firm has a conservative approach to tax and regulatory compliance risk and employs reputable external advisors that are specialized in those areas.
Own funds requirement
The Firm must, at all times, hold own funds and liquid assets which are adequate, both in their amount and quality, to ensure that the Firm is able to (i) remain financially viable throughout the economic cycle; (ii) address any material potential harm that may result from its ongoing activities; and (iii) ensure that the Firm’s business can be wound down in an orderly manner, minimising harm to consumers or to other market participants.
As a result of the introduction of the IFPR, the Firm has conducted and documented its Internal Capital Adequacy and Risk Assessment (ICARA) to identify whether the Firm complies with the abovementioned overall financial adequacy rule. The Firm may hold additional own funds or additional liquid assets above the Firm’s own funds requirement or basic liquid assets requirement to manage the potential harms identified.
The Firm’s ICARA is reviewed and approved by the Governing Body at least annually, or more often as deemed appropriate.
As a SNI firm, MG UK is required to maintain an amount that is the higher of the:
- Permanent minimum capital requirement (PMR); and
- Fixed overheads requirement (FOR), which is an amount equal to three months of the firm’s relevant expenditure.
For more information regarding the Firm’s own funds please contact: mifidpru@monumentgroup.com.
Concentration Risk
Concentration risk is the risk associated with the firm’s exposure to sectoral, geographic and entity or obligor concentrations. The Firm’s appetite for concentration risk is low.
For more information regarding the Firm’s strategies and processes for managing concentration risk, please contact: mifidpru@monumentgroup.com.
Liquidity Risk
Liquidity risk is the risk of the Firm failing to meet its short-term liabilities as they fall due. The Firm’s appetite for liquidity risk is low.
The Firm is required to hold an amount of liquid assets equal to one third of its Fixed Overhead Requirement. This is the basic liquid asset requirement and is made up of approved liquid assets, which include, cash, units or shares in short-term regulated money market funds and short-term deposits at UK credit institutions.
Remuneration
The Firm is required to comply with the MiFIDPRU Remuneration Code under IFPR, which aims to ensure that the Firm has risk-focused remuneration policies that promote sound and effective risk management and do not expose the Firm or its clients to excessive risk.
MG UK’s approach and objectives
MG UK formulated its remuneration policies and practices with reference to the guidance set out by the FCA. Via these policies and practices, the Firm considers the appropriate balance between fixed and variable remuneration as well as the constraints in place to avoid a conflict of interest between staff incentives and the best interests of MG UK’s clients.
The objectives of the Firm’s financial incentives are to:
- promote sound and effective risk management in the long-term interests of the Firm and its customers;
- limit risk-taking and avoid conflicts of interest
- ensure alignment between risk and individual reward
- supporting positive behaviours and healthy firm culture
- encourage responsible business conduct
- discourage behaviour that can lead to misconduct and poor customer outcomes
- align employee’s interests with the firm’s long-term strategy and objectives
- be gender neutral, in line with the Equality Act 2010.
Governance and decision-making procedures
The Governing Body is responsible for oversight and implementation of the Firm’s remuneration policy as well as compliance with the MiFIDPRU Remuneration Code. This includes oversight of the performance management process and the approval of variable remuneration awarded to individuals. The Governing Body works to ensure that the variable remuneration at the Firm does not affect the Firm’s ability to maintain a sound capital base.
The Firm assesses staff members via an ongoing and rigorous performance management process. The annual performance assessment outcome is used by the Governing Body as a contributing factor in the determination of remuneration.
Key characteristics of remuneration policies and practices
All staff receive fixed remuneration in form of a base salary; and all are considered for discretionary variable remuneration in form of a bonus where eligible.
Fixed remuneration
Base Salary
The Firm reviews the base salary of all staff members on an annual basis by considering factors such as market information and individual performance.
Variable remuneration
Bonus
All bonuses are discretionary and are dependent on the firm’s overall financial result to ensure a sound capital base.
For more information regarding the Firm’s remuneration policy, please contact: mifidpru@monumentgroup.com