Regulatory Disclosure


a) Pillar 1 Risks:

i) Credit Risk: with reference to GENPRU 2.1.51R and the various definitions of the components of credit risk, see BIPRU 3.1.3, Saracen is not exposed to any form of credit risk.

Credit risk components are credit risk capital component and a counterparty risk component. The definitions in BIPRU 3.1.3 and BIPRU 14.2.1 and BIPRU 14.2.2 respectively refer to trading book exposures. SFM does not operate a trading book.

ii) Market Risk: GENPRU 2.1.52 definitions and the type of instruments involved as defined in BIPRU 7.2.3 refer to trading book exposures. SFM does not operate a trading book.

iii) Operational Risk: As per GENPRU 2.1.45 operational risk is defined as the firm’s calculation of the fixed overhead requirement (FOR) as 13/52 of the annual relevant expenditure, taken from the most recently available set of annual audited accounts. Based on the accounts for the year to 31 March 2018 the FOR is £230k.

Further operational risks have been considered in the ICAAP. Scenario testing covering all the agreed risks to SFM concludes that the Pillar 2 requirement for SFM is £62k. Wind down analysis shows that the capital required for an orderly wind down would be less than the Pillar 1 requirement.
SFM has sufficient capital reserves to ensure ongoing capital adequacy.


As discussed in detail in the SFM ICAAP, to give a true reflection of the financial position of SFM after a period of re-organisation of the firm’s resources since the last set of audited accounts (to March 2018), the ICAAP utilises the ongoing budget as a basis for scenario and stress testing.

Pillar 1 requirement is the audited FOR £230k
Pillar 2 requirement £62k

Present capital resources (end March 2018) £392k
Pillar 2 requirement £62k

Surplus £330k
Pillar 2 requirement £62k

The ICAAP has been revised after publication of the audited accounts to 31 March 2018.


SFM is a BIPRU firm and is thus subject to the BIPRU Remuneration code (SYSC 19C.1.1R).

The Remuneration Policy:

(i) Is consistent with and promotes sound and effective risk management;

(ii) Does not encourage risk taking that exceeds the level of tolerated risk of SFM or the ICVC managed by SFM;

(iii) Encourages behaviour that delivers results which are aligned to the interests of the ICVC managed by SFM;

(iv) Aligns the interests of Code Staff with the long-term interests of SFM, the funds it manages and its investors;

(v) Recognises that remuneration should be competitive and reflect both financial and personal performance. Accordingly, Remuneration for Code Staff may be made up of fixed pay (salary and benefits, including pension) and variable (performance-related) pay;

(vi) Recognises that fixed and variable components should be appropriately balanced and that the variable component should be flexible enough so that in some circumstances no variable component may be paid at all.

There is no remuneration committee. The Board of SFM oversees the setting and review of remuneration levels. There is no performance related pay. There is no specified bonus scheme. After a shareholder/all staff consultation process it was agreed that continuing profitability would see the following preferred disbursement cascade: establishment of a 50% buffer above the minimum capital adequacy requirement; salary increases; staff bonuses; dividends.

The remuneration for code staff was as follows:

Number 5
Fixed £492k
Variable £0k
Total £492k

The total number of employees at this date is 9, of the 5 remuneration code staff, 3 are board members.