Legal

Pillar 3 disclosure – December 2018

Regulatory context

The Pillar 3 disclosure of Oxford University Endowment Management Limited (‘the Firm’) is set out below as required by the FCA’s ‘Prudential Sourcebook for Banks, Building Societies and Investment Firms’, BIPRU 11. This is a requirement which stems from the UK’s Capital Requirements Directives (CRD) III implementing Regulations which represented the European Union’s application of the Basel Capital Accord. The Firm is no longer formally subject to CRD but remains subject to the UK’s implementation Regulations of CRD III as they stood as at 31 December 2013 per the CRDIV Derogation adopted by the UK. The regulatory aim of the disclosures is to improve market discipline.

The CRDs three pillars are as follows:

This statement is published in accordance with the FCA rules concerning Pillar 3 disclosures in BIPRU 11. If the Firm deems a certain disclosure to be not applicable or immaterial, it may be omitted from this Statement.

Background to the Firm

The Firm is incorporated in the UK and is authorised and regulated by the FCA as a Full Scope UK AIFM of UK AIFs. In addition, the Firm is permitted to undertake Additional Activities permitted by AIFMD Art.6(4) which result in the Firm being a BIPRU Collective Portfolio Management Investment (CPMI) Firm.

The Firm is a solo regulated entity and the ICAAP covers this Firm only on an unconsolidated basis. The ICAAP assessment is reviewed by the Executive Directors and amended where necessary, on at least an annual basis or when a material change to the business occurs. The Executive Directors present the ICAAP document to the Board which reviews and endorses the risk management framework annually, or when a material change to the business occurs, at the same time as reviewing and signing off the ICAAP document.

The Firm is subject to the disclosures under the UK CRD III Implementing Regulations. However, it is not a member of a UK Consolidation Group and consequently, does not report on a consolidated basis for accounting and prudential purposes.

Risk management framework, objectives and policies

The Firm’s approach to risk management is predicated on the need to manage the full range of risks facing the Firm with the overriding aim to minimise the risks to the Firm’s clients, its counterparties and other stakeholders and to ensure it remains in full compliance with regulatory and legal requirements.

The Firm has a permanent risk management function, which is headed by the Chief Operating Officer (COO) who is also the Compliance Officer and a member of the Firm’s Board. The Firms maintains a risk management framework, which is a core component of the Firm’s high level systems and control arrangements and ensures all areas of the business are subject to senior management oversight. This framework incorporates all identified risks, an analysis of the impact of each risk on the business, the probability of each risk occurring and the procedures in place in mitigation.

The Firm’s Executive Directors review all functions within the business on a regular basis to ensure all risks have been identified within the framework. The risk management framework is supported by a wide range of real-time management information systems that monitor performance. The Firm has embedded within its business processes, at all levels, robust and effective risk management processes that are subject to regular appraisal. The Firm has also engaged an independent compliance consultant to provide independent FCA regulatory assistance which includes quarterly compliance and risk monitoring services.

Business risk

The Firm’s main business risk relates to a possible fall in assets under management as a result of turbulence in markets or substantial redemptions by investors and a consequent diminution in investment management fees.

Operational risk

The Firm has identified several key operational risks relating to trade error, failure of third party service providers, system failures and cyber security threats. The Firm places strong reliance on the operational procedures and controls that it has in place in order to mitigate these risks and seeks to ensure that all staff are aware of their responsibilities.

Credit risk

The Firm is exposed to the risk of the non-payment of investment management fees arising from the Firm’s management of various products and counterparty exposure relating to bank deposits. The administrator raises invoices and the Firm monitors receipt of payments performing monthly reconciliations to ensure settlement. In the case of bank deposits, money is only deposited with highly rated approved counterparties.

For its Pillar 1 regulatory capital calculation of Credit Risk, under the credit risk capital component the Firm has adopted the Standardised approach and the Simplified method of calculating risk weighting.

Please note: the Credit Risk Capital Requirement is only required to be calculated in respect of the Firm’s designated investment business (ie non AIF business). Numerical disclosures relating to credit risk are considered to be immaterial.

Market risk

The Firm’s market risk is not material as it has no significant assets or liabilities which have market exposure (ie an exposure to foreign exchange rate movements) and no positions in CRD financial instruments and commodities (ie trading book exposure).

Please note: the Market Risk Capital Requirement is only required to be calculated in respect of the Firm’s designated investment business (ie non AIF business). Numerical disclosures relating to market risk are considered to be immaterial.

Capital resources

The Firm is a BIPRU Investment Firm without an Investment Firm Consolidation Waiver deducting Material Holdings. Tier 1 Capital comprises Share Capital and Audited Reserves/Losses.

As a CPMI Firm, the Firm is subject to the capital requirements set out in IPRU(INV)11 and also BIPRU/GENPRU.  The Firm has the following capital resources:

Capital Resources £’000
Share capital 2,369
Audited reserves 11,397
Total tier 1 capital 13,766

 

Remuneration code

The aim of the Remuneration Code (the ‘Code’) is to ensure that firms have risk focused remuneration policies which promote and are consistent with effective risk management, and do not expose firms to excessive risk.

Oxford University Endowment Management Limited (the ‘Firm’) has proportionately implemented the Code based on the FCA’s general guidance on the AIFM Remuneration Code.

Remuneration policy

The Firm has adopted a remuneration policy which addresses potential conflicts of interest by taking into account the controls in place to guard against those persons with authority to make investment decisions and persons undertaking significant influence functions being rewarded for taking inappropriate levels of risk.

The Firm is satisfied that the policies in place are appropriate to its size, internal organisation and the nature, scope and complexity of its activities.

The decision making process

The Firm’s Policy is determined by the Remuneration Committee, consisting of the five non-executive directors of the Firm. The Remuneration Committee is chaired by the Chair of Oxford University Endowment Management Limited.

Link between pay and performance

In addition to salary, there is a Discretionary Award scheme in place for all staff and a Formulaic remuneration scheme in place for all Eligible Members. Both Discretionary and Formulaic awards are capped and linked to individual and Fund performance respectively. All awards are at the discretion of the Remuneration Committee and staff have no entitlement to them.

Quantitative remuneration disclosures

Based on the Firm’s profile, senior management consider that it has one business area, investment management. For the purposes of the remuneration disclosures required, the Firm has identified staff who have a material impact on the risk profile of the firm. For the five months ended 31 December 2018, the total remuneration for these Code Staff was £0.8m. No material sign-on or severance payments were made.

UK Stewardship Code

Under Rule 2.2.3R of the Financial Conduct Authority’s Conduct of Business Sourcebook, Oxford University Endowment Management Limited (the “Firm”) is required to include on this website a disclosure about the nature of its commitment to the UK Financial Reporting Council’s 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.

The Funds which the Firm manage invest predominantly via other investment managers and hold only a small number of equities directly. Consequently, while the Firm supports the general objectives that underlie the Code, the provisions of the Code are not relevant to the type of investing currently undertaken by the Firm. If the investment strategy of the Funds which the Firm manage changes in such a manner that the provisions of the Code become more relevant, the Firm will amend this disclosure accordingly.

Website general terms of use

ATTENTION: These terms apply to your use of the website under the domain name www.ouem.co.uk (the “Website”). Please read these terms carefully before using the Website.

1. Introduction
1.1 The Website is operated by OU Endowment Management Limited, a company registered in England and Wales under number 06242141 with its registered office at University Offices, Wellington Square, Oxford, OX1 2JD (the “Company”).

1.2 By accessing any part of the Website, you shall be deemed to have accepted these terms in full. If you do not accept these terms in full, you must leave the Website immediately.

1.3 The Company may vary these terms at any time by updating this posting. You should check the Website from time to time to review the then current terms, because they are binding on you.

2. Licence
2.1 You are permitted to print and download extracts from the Website for your own use on the following basis:

2.1.1 no documents or related graphics on the Website are modified in any way;

2.1.2 no graphics on the Website are used separately from the corresponding text; and

2.1.3 the Company’s copyright and trade mark notices and these terms appear in all copies.

2.2 Unless otherwise stated, the copyright and other intellectual property rights in all material on the Website (including without limitation photographs and graphical images) are owned by the Company or its licensors. For the purposes of these terms, any use of extracts from the Website other than in accordance with clause 2.1 for any purpose is prohibited. If you breach any of these terms, your permission to use the Website automatically terminates and you must immediately destroy any downloaded or printed extracts from the Website.

2.3 Subject to clause 2.1, no part of the Website may be reproduced or stored in any other website or included in any public or private electronic retrieval system or service without the Company’s prior written permission.

2.4 Any rights not expressly granted in these terms are reserved.

3. Website access
3.1 The Company shall not be liable if for any reason the Website is unavailable at any time or for any period.

3.2 Access to the Website may be suspended temporarily and without notice for any reason, including, without limitation, in the case of system failure, maintenance or repair or for reasons beyond the Company’s control.

4. Visitor material and conduct
4.1 The Company may process information about you in accordance with its Privacy Policy. By using the Website you consent to such processing and you warrant that all data provided by you is accurate.

4.2 Other than personally identifiable information, which is covered under our Privacy Policy, any material you transmit or post to the Website shall be considered non-confidential and non-proprietary. The Company shall have no obligations with respect to such material. The Company and its designees shall be free to copy, disclose, distribute, incorporate and otherwise use such material and all data, images, sounds, text and other things embodied therein for any and all commercial or non-commercial purposes.

4.3 You may not misuse the Website (including, without limitation, by hacking) and are prohibited from posting or transmitting to or from the Website any material:

4.3.1 that is threatening, defamatory, obscene, indecent, seditious, offensive, pornographic, abusive, liable to incite racial hatred, discriminatory, menacing, scandalous, inflammatory, blasphemous, in breach of confidence, in breach of privacy or which may cause annoyance or inconvenience;

4.3.2 for which you have not obtained all necessary licences and/or approvals;

4.3.3 which constitutes or encourages conduct that would be considered a criminal offence, give rise to civil liability, or otherwise be contrary to the law of or infringe the rights of any third party, in any country in the world; or 4.3.4 which is technically harmful (including, without limitation, computer viruses, logic bombs, Trojan horses, worms, harmful components, corrupted data or other malicious software or harmful data).

4.4 The Company shall fully co-operate with any law enforcement authorities or court order requesting or directing the Company to disclose the identity or locate anyone posting any material in breach of clause.

5. Links to and from other websites
Links to third party websites on the Website are provided solely for your convenience. If you use these links, you leave the Website. The Company has not reviewed any of these third party websites, does not control and is in no way liable for these websites or their content or availability. The Company does not endorse or make any representations about such websites, or any material found there, or any results that may be obtained from using them. If you decide to access any of the third party websites linked to the Website, you do so entirely at your own risk.

6. Disclaimer
6.1 The Company does not warrant the accuracy and completeness of the material on the Website. The Company may make changes to the material on the Website, or to the products and prices described in it, at any time without notice. The material on the Website may be out of date, and the Company makes no commitment to update such material.

6.2 Whilst the Company has taken reasonable care to ensure the material on this Website is reliable, all material is provided “as is”, without any conditions, warranties or other terms of any kind. To the maximum extent permitted by law, the Company excludes all representations, warranties, conditions and other terms (including, without limitation, the conditions implied by law) which, but for these terms, might have effect in relation to the Website.

7. Liability
7.1 The Company, any other party (whether or not involved in creating, producing, maintaining or delivering the Website), and any of the Company’s group companies and the officers, directors, employees, shareholders or agents of any of them, exclude all liability and responsibility for any amount or kind of loss or damage that may result to you or a third party (including without limitation, any direct, indirect, punitive or consequential loss or damages, or any loss of income, profits, goodwill, data, contracts, use of money, wasted management or office time or loss or damages arising from or connected in any way to business interruption, and whether in tort (including without limitation negligence), contract or otherwise) in connection with the Website in any way or in connection with the use, inability to use or the results of use of the Website, any websites linked to the Website or the material on such websites, including but not limited to loss or damage due to viruses that may infect your computer equipment, software, data or other property on account of your access to, use of, or browsing the Website or your downloading of any material from the Website or any websites linked to the Website.

7.2 Nothing in these terms shall exclude or limit the Company’s liability for:

7.2.1 death or personal injury caused by negligence;

7.2.2 fraud;

7.2.3 misrepresentation as to a fundamental matter;

7.2.4 any duty or liability it may have to a client under the regulatory system (as defined by FCA Rules); or

7.2.5 any other liability which cannot be excluded or limited under applicable law.

7.3 If your use of material on the Website results in the need for servicing, repair or correction of equipment, software or data, you assume all costs thereof.

8. Governing law and jurisdiction
This legal notice shall be governed by and construed in accordance with English law. Disputes arising in connection with these terms shall be subject to the exclusive jurisdiction of the English courts.

Privacy notice
OUem’s privacy notice for investors is found here

Cookies
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How we use cookies
We use a number of different cookies on our site. The list below describes the cookies we use on this site and what we use them for. Currently we operate an ‘implied consent’ policy which means that we assume you are happy with this usage.

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Cookies used by OUEM.co.uk
Content management system: 
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Google Analytics

We use Google Analytics to collect information about how visitors use our website so that we can improve it. Google Analytics tells us things like what pages people visit, how long they are on the site, how they got here and what they click on. To do this we use several cookies to record anonymous information about how you use the website. None of these cookies record personal information about you (e.g. your name or address) and we cannot use them to identify who you are. The information is only used by this site and is not shared with Google.

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Annual Best Execution Disclosure 2017

Annual Best Execution Disclosure 2017 can be found here