SFC Capital Partners Ltd (the 'firm') is a Sub-threshold Alternative Investment Fund Manager ('sub-threshold AIFM') that is a MIFIDPRU Investment Firm regulated by the Financial Conduct Authority's ('FCA') and subject to disclosures on its risk management policies and procedures in accordance with the Investment Firms Prudential Regime (IFPR) and MIFIDPRU regulations.
These disclosures are published on at least an annual basis and based on the position of SFC Capital Partners Ltd as at 31 August 2023. The disclosures are not subject to audit, except where they are equivalent to those included in the audited financial statements of the company.
The firm's directors form the governing body providing oversight and take responsibility for the strategic leadership of the partnership, within a framework of good corporate governance and prudent and effective controls enabling risk to be assessed and managed.
The directors constitute the Risk Committee, though as an Execution-only broker, the firm faces reduced risks. The directors set the company's strategic aims, ensuring financial and human resources are in place to meet its objectives and regularly review performance.
SFC Capital Partners Ltd is committed to encouraging equality, diversity, and inclusion among its workforce, and eliminating discrimination through policies that promote equal opportunities in the recruitment, training and development its members.
The directors of the firm assess the risks faced by the firm on an ongoing basis through its Internal Capital Adequacy and Risk Assessment (ICARA) process, with the aim to operate a defined and transparent risk management framework. These policies and procedures are updated as required.
The firm has identified the material risk types to which it is exposed as follows:
Operational risk is the risk of loss resulting from internal processes which are inadequate or have failed due to human errors, system failures, or external events. The firm is exposed to operational risk within its core business, with the loss of key staff identified as having potential to negatively impact the firm's financial activity and performance.
The firm seeks to manage and mitigate operational risk through continuously improving processes and control, regular internal reporting and encouraging a positive and proactive management and operational risk culture.
Business risk encompasses the exposure to uncertainty in wider economic and competitive environment and the impact on the firm's ability to carry out its stated business plan. The risk is managed with a long-term focus, assisted by appropriate management oversight to maintain high investment performance and trade execution levels for clients.
The firm has longstanding and strong relationships with its clients and does not have any direct exposure to a single client or group of connected clients.
The risk that the firm is unable to meet its liabilities as they fall due. To manage this risk the firm maintains a surplus of liquidity resources sufficient to meet current operational requirements that can be prudently foreseen as well as reasonable unexpected events on cost effective terms. The firm has resources in excess of its fixed overhead requirements.
The firm conducts ongoing reviews of its internal systems and controls to ensure it maintains adequate financial resources to manage and mitigate the identified risks that may result in material harm or result in the winding down of the business. This assessment is performed through daily capital adequacy calculations and its Internal Capital Adequacy and Risk Assessment (ICARA) process.
All capital requirements were met during the year under review.
SFC Capital Partners Ltd regularly assesses its internal capital to ensure it meets the ongoing needs of the firm whilst maintaining a strong capital base to accommodate future developments in the business. At all times the firm ensures that it satisfies the MIFIDPRU 3 requirements that its total Own Funds are greater than 100% of its Own Funds Requirement as laid out under MIFIDPRU 4.3.
The firms own funds requirement for period ending 31 August 2023 was the greater of:
As at 31 August 2023 the firm had total own funds of £934,525 comfortably exceeding its baseline requirements. A reconciliation of the firms total own funds to the financial statements is as follows:
Total Own Funds £000's Common Equity Tier 1 Capital £115 Additional Tier 1 Capital £ Tier 2 Capital £ Tier 3 Capital £ Total Own Funds £934 Core liquid assets £934 Total core liquid assets £
SFC Capital Partners Ltd.'s own funds are comprised only of Common Equity Tier 1 items with no deductions from capital.
Marguerite Crossfield
Head of Compliance
2 Maple Court,
Davenport Street,
Macclesfield,
Cheshire,
England,
SK10 1JE