The European Union Capital Requirements Directive (‘Basel II’) was introduced on 1 January 2007. Implementation of the Directive in the UK has been achieved through a series of rules introduced by the Financial Conduct Authority (‘FCA’). The Basel II rules are set out in three ‘Pillars’:
Pillar 1 – sets out the minimum regulatory capital requirements.
Pillar 2 – describes the supervisory review process and the assessment of additional capital resources required to cover specific risks faced by a company that have not been covered by the minimum regulatory requirements set out in Pillar 1.
Pillar 3 – aims to encourage market discipline by providing market participants with key information on a company’s risk exposures and risk management processes.
This document has been produced to meet the requirements arising from Pillar 3 and has been prepared in accordance with BIPRU 11. This disclosure has not been subject to audit.
These disclosures are made annually.
The most recent disclosure can be found on the Company’s website.
Review and Challenge
This document has been approved by the Revera Asset Management Ltd Board of Directors. It has not been subject to external audit.
Revera Asset Management Ltd (‘Revera’ or ‘the Company’) is a small investment boutique managing a variety of investment products including an OEIC and a Unit Trust. Being classified as a small wholesale firm, Revera does not deal directly with retail clients. All current clients have been classified as professional clients.
Revera does not hold client money.
Revera is categorised as a limited licence firm by the FCA for capital purposes. It is not a member of a group and so reports on a stand-alone basis.
The disclosures in this document complement the work already undertaken by Revera under the FCA’s Internal Capital Adequacy Assessment Process (‘ICAAP’).
Revera’s Board of Directors (‘the Board’) is responsible for identifying and evaluating risks in the Company. A risk management framework has been introduced in order that risks may be recorded, rated, monitored, and mitigated.
Revera has a low appetite for risks arising from financial control, investment administration, fraud, money laundering, credit control, health and safety, legal and compliance. Revera has a medium appetite for the risks that are inherent in developing its business and those risks that arise from a business whose revenue is directly related to Stock Market performance.
In Revera, the most significant risks are considered to be those associated with business risk and operational risk.
Business risk is the risk that a company will not be able to carry out its current business plan. As part of the ICAAP process, stress testing has been carried out on Revera’s forecast. This testing has centred on the potential outcomes arising from scenarios such as a significant fall in the market, new business is lower than expected and where funds under management fall.
Operational risk, inherent in all businesses, is the potential for financial and reputational loss arising from failures in internal controls, operational processes or the systems that support them. It includes errors, omissions, disasters and deliberate acts such as fraud.
Under Pillar 1, Revera is not required to hold capital for operational risk.
Under Pillar 2, operational risk has been considered as part of Revera’s ICAAP process. The financial impact of significant risks has been assessed and then adjusted to reflect the likelihood of such a risk materialising. Where mitigating factors have been exhausted, Revera has allocated capital to deal with such risks.
Market risk is the risk of loss arising from adverse movements in the level or volatility of market prices of commodities in which a company holds a position. Revera does not hold, nor has any plans to hold any such investments for its own account. Furthermore, Revera does not currently hold any assets that are directly exposed to foreign currency risk. This risk is currently assessed to be nil.
Since Revera does not have a Trading Book, credit risk arises primarily from non-payment of management fees and cash balances held on deposit.
This risk has been assessed with regard to impact and probability and concluded that it is not a material risk for Revera.
There is no Trading Book, therefore this risk is assessed to be nil.
Liquidity risk is not considered to be material as Revera has a strong cash position on its Balance Sheet and no bank borrowings as at 31 December 2016. Liquidity risk is monitored using Revera’s liquidity framework.
Revera is not involved in any securitisation arrangements. Therefore, this risk is considered to be nil.
Insurance risk is the inherent uncertainty as to the occurrence, amount and timing of insurance liabilities. This is not considered to be a material risk.
Pension Obligation Risk
Pension obligation risk is the risk to a company caused by contractual or other liabilities to or with respect to a pension scheme.
Due to legislation changes, Revera will be obliged to make pension contributions into a pension scheme for each employee from 1 April 2017. The contributions will be made to defined contribution schemes, and as such is captured in the Company’s Pillar 1 obligations relating to its fixed overhead requirement.
Interest Rate Risk
This is not considered to be material to Revera.
Revera does not lend money and most debtors are trade debtors. Revera has very limited exposure to credit risk.
Capital resources comprise Tier 1 Capital from which deductions for illiquid assets are made.
A summary of Revera’s Total Capital resources can be found below –
|Tier 1 Capital||425|
|Tier 2 Capital||–|
|Tier 3 Capital|
|Total Capital before deductions||425|
Share capital is made up entirely of ordinary share capital of £1 per share. Individual shares rank equally and carry the same voting rights.
Pillar 1 Capital for Revera is the greatest of:
Revera has adopted the standardised approach to the calculation of the credit risk requirement, being 8% of the total of its risk weighted exposure amounts for exposures falling into BIPRU 3.1.6R. The simplified method of calculating risk weights, as described in BIPRU 3.5, has been used.
Exposure arises from fixed assets, investment management fees due from UK clients, and cash held on instant access deposit at UK banks. As at 31 December 2016 no exposures were past due (i.e. debts that are 30 days or more past their due date) or considered impaired (i.e. debt that is 90 days or more past its due date). The credit risk capital requirement as at 31 December 2016 has been calculated as being £11,409 (2015: £13,548).
As noted above, Revera is not exposed directly to market risk and there is no significant exposure to foreign exchange risk.
The fixed overhead requirement for Revera has been calculated as £177,000 which is greater than the credit risk requirement noted above. Therefore, the Pillar 1 Capital for Revera is equal to its fixed overhead requirement of £177,000.
ICAAP (Internal Capital Adequacy Assessment Process)
The ICAAP process pulls together the Risk Management and Budgetary processes. The ICAAP model is stress tested using various scenarios over a 1 to 3-year time horizon. The capital required to enact an orderly wind up of Revera is also assessed as part of this process.
The ICAAP process is undertaken annually and is reviewed and challenged by the Board.
The ICAAP for December 2016 resulted in an assessment of the ICAAP capital to be £261,000 (2015: £264,000). As this is greater than the capital required for Pillar 1, the ICAAP capital/ Pillar 2 capital is considered to be the minimum capital that must be held.
Revera is a BIPRU firm, as defined by the FCA, but due to its investment management activities for UCITS funds through a delegated arrangement with a UK UCITS management company, it is required to meet its Remuneration Code (‘the Code’) obligations under SYSC 19C (for BIPRU firms) and SYSC 19E (for UCITS firms) by complying with SYSC 19E.
Revera’s Remuneration Policy is governed and directly implemented by its Board. Remuneration is structured to achieve the aims of the Remuneration Policy, that is;
Remuneration is based on a fixed element which is appropriate for the size and variability of Revera’s income, and a variable element that is dependent on the profitability of Revera as a whole. Specifically, Revera will not pay variable remuneration, if doing so would put the Company in a loss making position.
In the year to 31 December 2016, Revera had 5 Code staff whose total remuneration was £403,000. £5,000 of this remuneration was variable.
Please read the information on this page before proceeding. It contains the legal and regulatory restrictions which may apply to our investment products and services, and any communication that we may have with anyone viewing this site.
The information on this website is intended only for those who are considered, or would reasonably be considered, professional clients or eligible counterparties as defined by the Markets in Financial Instruments Directive (MiFID), and are ordinarily resident in the United Kingdom. Any person who is unsure of their likely client classification must seek independent financial advice before acting on any information contained in this website. Persons resident in countries other than the UK should consult their professional advisers as to whether they require any governmental or other consents in order to enable them to invest in any product or service described in this website.
The information contained herein does not constitute an offer of, or an invitation to apply for, securities in any jurisdiction where such an offer is unlawful or in which the person making such an offer is not qualified to do so or to whom it is unlawful to make such an offer or solicitation.
Revera Asset Management Limited (“Revera”) has taken every care to ensure accuracy of the information contained on the website at the time of publication. Revera will not, however, warrant the accuracy of the information unless specifically received in writing from a Director of the Company. Revera will not be held liable for damages caused to any user of the information on this website, and nor can Revera ensure that the website is free from computer viruses.
Revera Asset Management Limited is Authorised and Regulated by the Financial Conduct Authority, firm reference number 230779.
The following policies and disclosures are available to clients and potential clients. Best execution policy; Conflicts of Interest Policy; Pillar III Capital disclosures. To see a copy of these policies of disclosures, please contact the Company Secretary.
The value of an investment in any of Revera’s products or services may go down as well as up. The investor may not get back the capital originally invested.
The underlying portfolios in Revera’s products or services are likely to be more concentrated than other investment funds and there for may be more risky that more diversified portfolios.
There can be no guarantee that the investment objectives of any of Revera’s products or services will be met.
There will be times when the investment performance of Revera’s products or services will be unlike that of any stock market index which may or may not be advantageous to investors.
Reliefs from taxation applicable to Open Ended Investment Companies, Unit Trusts and directly held unlisted equities qualifying for Business Property Relief may change at any time.
Past performance is not necessarily a guide to future performance.