Brooklands Fund Management Limited is registered in England and Wales (10170491)

Brooklands Fund Management Limited is authorised and regulated by the Financial Conduct Authority (FRN 757575) and registered as an investment advisor with the US Securities and Exchange Commission (CRD 286221)

© 2018 Brooklands Fund Management Limited

 

 

Pillar 3 Statement

Regulatory Context

Brooklands Fund Management Limited (“Brooklands”), is a UK domiciled limited liability company. Brooklands is authorised and regulated by the Financial Conduct Authority (“FCA”) and as such is required to publish certain details of its risks, capital and risk management in order to improve transparency and market discipline. Accordingly, Brooklands will be making this and certain other disclosures on the Brooklands website, at least annually. However, it should be noted that the information contained in these disclosures has not been audited and does not constitute any sort of financial statement and should not be relied upon in making any judgement on Brooklands.

 

Capital Requirement

The Capital Requirements Directive (the “Directive”) of the European Union establishes a revised regulatory capital framework across Europe governing the amount and nature of capital credit institutions and investment firms must maintain.

 

In the United Kingdom, the Directive has been implemented by the FCA in its regulations through the General Prudential Sourcebook (“GENPRU”) and the Prudential Sourcebook for Banks, Building Societies and Investment Firms (“BIPRU”).

 

The FCA framework consists of three ‘Pillars’:

 

  • Pillar 1 sets out the minimum capital amount that meets the firm’s credit, market and operational risk capital requirement;

  • Pillar 2 requires the firm to assess whether its capital reserves, processes, strategies and systems are adequate to meet pillar 1 requirements and further determine whether it should apply additional capital, processes, strategies or systems to cover any other risks that it may be exposed to.

  • Pillar 3 requires disclosure of specified information about the underlying risk management controls and capital position to encourage market discipline.

 

The rules in BIPRU 11 set out the provision for Pillar 3 disclosure. This document is designed to meet our Pillar 3 obligations.

 

The Pillar 3 disclosure document has been prepared by Brooklands in accordance with the requirements of BIPRU 11 and is verified by the senior management. Unless otherwise stated, all figures are as at the financial year-end.

 

We are permitted to omit required disclosures if we believe that the information is immaterial such that omission would be unlikely to change or influence the decision of a reader relying on that information for the purpose of making economic decisions about the firm. Where we have chosen to omit information because it is proprietary or confidential we have explained the omission and provided our reason.

 

The FCA categorises Brooklands as a ‘125k limited licence’ firm for capital purposes, and is not required to prepare consolidated reporting for prudential purposes. The ‘125k’ refers to a base capital requirement of 125 thousand euros. In order to meet the Basel II Pillar 1 minimum capital requirement, Brooklands must maintain capital resources equal to or in excess of its Variable Capital Requirement (being the higher of (i) the Fixed Overhead Requirement or (ii) the sum of the Credit Risk Capital and the Market Risk Capital Requirements). As a BIPRU limited licence firm, there is no need for Brooklands to calculate an Operation Risk Capital Requirement for Pillar 1 purposes.

 

Basel Pillar 2 requires Brooklands to ascertain whether it should hold additional capital against risks not covered in Pillar 1, such that it can meet its liabilities as they fall due. As required by the FCA, Brooklands conducts a systematic Internal Capital Adequacy Assessment Process (“ICAAP”) on an annual basis. In the event that this exercise was to produce a higher requirement than Pillar 1, Brooklands would need to maintain this higher requirement. Basel Pillar 3 requires Brooklands to disclose objectives and policies for each category of risk including strategies and processes to manage risks, risk management functional structure and arrangements, the scope and nature of risk reporting and measurement systems and policies for hedging and mitigating risks on a continuous basis.

 

Risk Management Framework

Brooklands’ directors determine its business strategy and risk appetite along with designing and implementing a risk management framework that recognizes the risks that the firms’ business faces. Brooklands’ directors manage risks though a framework of policy and procedures having regard to relevant laws, standards, principles and rules (including FCA principles and rules) with the aim to operate a defined and transparent risk management framework. A formal risk review is conducted at least quarterly and the ICAAP is reviewed on at least an annual basis (unless events warrant an interim review).

 

Brooklands’ directors meet on a regular basis and discuss current projections for profitability and regulatory capital management, business planning and risk management. These policies and procedures are updated as required. To the extent that the management identify material risks, the financial impact of these risks are assessed as part of the business planning and capital management in order to determine whether the amount of regulatory capital is adequate.

 

The management have identified that business, operational, market and credit risks are the main areas of risk to which Brooklands is exposed.

 

Brooklands is a relatively small firm with a simple operational infrastructure. Operational risk (namely loss resulting from inadequate or failed internal processes, people and systems or from external events) is actively managed through a controls framework. Brooklands maintains comprehensive insurance policies. Data is backed up and is stored in the “cloud”.

 

Brooklands’ market risk is limited to foreign exchange risk on its accounts receivable in foreign currency. Brooklands also has credit risk from fees receivable from the funds under its management and cash held on deposit at large international credit and regulated institutions. Brooklands follows the standardized approach to market risk and the simplified standard approach to credit risk. Brooklands is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

 

Appropriate action is taken where risks are identified which fall outside of the firm’s risk tolerance levels or where the need for remedial action is required in respect of identified weaknesses in the firm’s mitigating controls.

 

Brooklands Regulatory capital

Brooklands is a limited liability company and its capital arrangements are established in its Memorandum and Articles of Association. Its regulatory capital as at 31 December 2018 is summarised as follows:

                                                                         £,000

Members’ capital                                            459

Total capital resources requirement              111

Surplus                                                             348

We have not identified credit risk exposure classes or the minimum capital requirements for market risk as we believe that they are immaterial. It is Brooklands’ experience that the Fixed Overhead Requirement establishes its capital requirements and hence market and credit risks are considered not to be material.

The main features of the Firm’s capital resources for regulatory purposes are as follows:

                                 31 December 2018
                                                                         £000

Tier 1 capital*                                                  481

Tier 2 capital                                                    -

Tier 3 capital                                                    -

Deductions from Tiers 1 and 2                       -

Total capital resources                                    481

Brooklands is relatively small with a simple operational infrastructure. Its market risk is limited to foreign exchange risk on its accounts receivable in foreign currency, and credit risk from management and performance fees receivable from the funds under its management. The Firm follows the standardised approach to market risk and the simplified standard approach to credit risk. The Firm is subject to the Fixed Overhead Requirement and is not required to calculate an operational risk capital charge though it considers this as part of its process to identify the level of risk based capital required.

 

As discussed above the firm is a limited licence firm and as such its capital requirements are the greater of:

 

  • Its base capital requirement of €125,000; or

  • The sum of its market and credit risk requirements; or

  • Its Fixed Overhead Requirement.

 

We have not identified credit risk exposure classes or the minimum capital requirements for market risk as we believe that they are immaterial.

 

It is the Firm’s experience that the Fixed Overhead Requirement establishes its capital requirements.

 

Capital requirement

Brooklands’ Pillar 1 capital requirement has been determined by reference to the firm’s based capital requirement.

 

Remuneration Code Statement

 

Remuneration code disclosure

Brooklands is authorised and regulated by the Financial Conduct Authority as a Limited Licence Firm and so, it is subject to FCA Rules on remuneration. These are contained in the FCA's Remuneration Code located in the SYSC Sourcebook of the FCA’s Handbook. The Remuneration Code (“the RemCode”) covers an individual’s total remuneration, fixed and variable. The Firm incentivises staff through a combination of the two.

 

Our policy is designed to ensure that we comply with the RemCode and our compensation arrangements:

 

  • are consistent with and promotes sound and effective risk management;

  • do not encourage excessive risk taking;

  • include measures to avoid conflicts of interest; and

  • are in line with the Firm's business strategy, objectives, values and long-term interests.

 

Proportionality

Enshrined in the European remuneration provisions is the principle of proportionality. The FCA have sought to apply proportionality in the first instance by categorising firms into 4 tiers. The Firm falls within the FCA's fourth proportionality tier and as such this disclosure is made in line with the requirements for a Tier 4 Firm.

 

Brooklands has a Remuneration Committee comprising Brooklands’ partners. The Remuneration Committee is mandated to administer and implement the remuneration policy, which aims to ensure that Brooklands’ employees are appropriately incentivised, while at the same time promoting effective and responsible risk management. Brooklands’ employees are remunerated with an annual fixed salary, and a discretionary bonus which may be a greater proportion of total remuneration than fixed salary, but is not necessarily the case. The aggregate amount of the discretionary bonus pool for the Brooklands employees as a whole is determined annually by reference to Brooklands’ net profits in that year, having regard to prudent business practices, current and future risks identified in Brooklands’ latest written risk review and the long term interests of Brooklands as a whole. The bonus pool is allocated between individuals by reference to balanced principles based on business unit and individual financial and non-financial performance criteria. The detailed individual performance criteria established by the Remuneration Committee include management of risks, financial discipline, contribution to Brooklands’ prospects, reputation and returns, management of resources and effective team management.

 

The UK Stewardship Code

 

Under Rule 2.2.3R of the FCA’s Conduct of Business Sourcebook, Brooklands is required to include on this website a disclosure about the nature of its commitment to the UK Financial Reporting Council's UK Stewardship Code (the "Code") or, where it does not commit to the Code, its alternative investment strategy. The Code is a voluntary code and sets out a number of principles relating to engagement by investors with UK equity issuers. Investors that commit to the Code can either comply with it in full or choose not to comply with aspects of the Code, in which case they are required to explain their non-compliance.

 

As a fiduciary and alternative investment fund manager, Brooklands has a duty to act in the best interests of all investors and our aim is to protect and enhance returns in line with a fund’s investment guidelines and objectives and any specific risk tolerances specified within a fund’s Offering Memorandum.

 

 

Our Privacy Policy

 

Brooklands and its affiliates are committed to protecting client privacy. We will endeavour to ensure that any personal data provided by you, either through a request for further information or registration, is kept secure against unauthorised access, loss, disclosure and destruction. Any such information is not gathered by us without users knowing, active permission and participation. We respect the privacy of users visiting our site and we do not share any personally identifiable information with any third parties.

 

Other than its affiliates, Brooklands will not pass your information on to other product or service companies. However, your details will be used to respond to an enquiry or may be used by us to send you information on other products and services that we offer. If you prefer not to receive such information, please advise us.

 

The use of any personal information held by Brooklands is covered by the Data Protection Act. Under the terms of that Act, you have the right to obtain a copy of the information we hold about you, upon payment of the appropriate fee.

 

Please note that messages sent via email may not be secure. We recommend that you do not send any confidential information to us via email. If you choose to do so, this is at your own risk with the prior knowledge that a third party may be able to intercept this.

 

We may collect information about your computer, including where available your IP address, operating system and browser type, for system administration and to report aggregate information to our advertisers. This is statistical data about out users' browsing actions and patterns, and does not identify any individual.

 

Our Cookies Policy

 

Cookies are small text files – typically of letters and numbers – originating from the websites visited which are stored on your computer (either your browser or your computer's hard drive) when you visit such websites. In general, cookies help identify you through your IP address, without collecting information about your identity. Cookies are used to store a variety of information about you and your preferences which is afterwards sent back to the visited website. You can get more information about cookies by visiting http://www.ico.gov.uk/for_organisations/privacy_and_electronic_communications/the_guide/cookies.aspx.

 

We use two types of cookies on our website:

 

  • Session cookies - these are temporary cookies that remain in the cookie file of your browser until you close the browser. This is to ensure connections to our servers are distributed evenly to provide optimal performance.

  • Analytical cookies - Our website uses Google Analytics cookies (third party cookies) in order to:

    • record the time of your first visit to website, the time of your most recent visit to the website and the duration of your visit;

    • to record how you located our website (i.e. Google search, keywork, link from other page etc).

 

We only share the information obtained through the use of Google Analytics with Google. The cookies we use for these purposes do not track your Internet usage after leaving our website and do not store your personal information. They will not be used in connection with any other information to identify you in any way. We may collect information about your computer, including where available your IP address, operating system and browser type, for system administration. This is statistical data about out users' browsing actions and patterns, and does not identify any individual.

 

You may refuse to accept cookies by activating the setting on your browser which allows you to refuse the setting of cookies. However, if you select this setting you may be unable to access certain parts of our site. Unless you have adjusted your browser setting so that it will refuse cookies, our system will issue the cookies described above when you log on to our site.