Capita Financial Managers (Ireland) Limited

Strength in partnership
Capita Financial Managers
(Ireland) Limited
About us
Capita Financial Managers (Ireland) Limited (CFMI) was
established in Ireland in 2006, and is authorised by the Central
Bank of Ireland to act as both a UCITS management company and
an Alternative Investment Fund Manager (AIFM).
We are part of a FTSE 100 company, with over 70,000
employees and a market capitalisation of over £8bn. Capita have
over 25 years’ experience in acting as the management company
to investment funds and manage over £50bn of assets in the
UK & Ireland.
We act for blue chip global investment banks as well as
international investment management firms and private wealth
managers in Europe, America and Asia.
By combining the group’s size, strength and wide-ranging
capabilities with our local experience and expertise we are able to
provide tailored independent third-party management company
services to both our UCITS and alternative investment fund clients.
Leveraging this expertise, combined with substantial continued
investment in technology and people, we have developed a
market leading 3rd party management company service.
Our Responsibilities
We do…
We do not…
–– monitor that the fund is managed in line with the
funds documents and the applicable regulations
–– have control of the fund itself. All material decisions
and control are retained by the board of the fund
The fund management
company is responsible
for ensuring that it and
its investment funds under
management comply with
regulatory obligations.
Central Bank of Ireland Guidance
issued November 2015
The board of an externallymanaged investment company
retains ultimate responsibility
for its management including
the appointment and oversight
of the fund management company
which is its principal delegate.
Central Bank of Ireland Guidance
issued November 2015
–– support the board of the fund in ensuring that the
day to day responsibilities and functions are met
–– actively supervise our delegates to ensure that they
are performing their appointed roles
–– rely on the data or reporting from the Investment
Manager / Portfolio Manager in order to monitor
investment performance or investment risk
–– ensure that there is a functional and hierarchical
separation of the risk management and portfolio
management functions
–– sit on any of the fund boards or insist on appointing
any of our Directors to the fund board.
–– provide the business plan / programme of activity
and ensure it is maintained and updated
–– report to the board on a monthly basis and attend
and present at the fund’s board meetings.
Management Company fund structure
CFMI are appointed by the fund under a Management Agreement.
The Investment Manager / Portfolio Manager is appointed by the Management
company under an Investment / Portfolio Management agreement.
CFMI can seamlessly link into 3rd party administrators once an automated data-feed
is connected to our risk system.
Fund Board
Legal Advisors
Depositary /
Custodian
Auditors
AIFM / MANCO
CFMI
Sub-custodian
Network /
Prime
Brokers
Investment
Manager /
Portfolio
Manager
Administrator
Distributor
Governance Structure
Risk Management
1. Investment Risk
During 2016, all management companies
must amend their business plans / programme
of activities with the Central Bank to demonstrate
that they have appropriate policies and procedures
to manage their funds under the following six
managerial functions:
We have made significant investment in the latest technology
to ensure that we can perform the risk management function
completely independent of the investment / portfolio manager.
We have implemented Statpro Revolution as the basis of our
comprehensive risk management framework. This marketleading performance measurement and risk analytics cloudbased solution takes the portfolio data directly from the
fund administration system and provides daily reporting and
analysis on each of the funds we manage.
Our system data is backed up daily to a secure BC/DR
operational site.
Each fund is evaluated in order to identify, measure, monitor
and manage all the risks relevant to its investment strategy.
In addition to VaR, performance attribution and liquidity
analysis, stress testing and scenario based testing are also
performed in order to understand the impact of a specific event
on the fund’s risk profile.
This analysis is reviewed daily and a full comprehensive suite
of dashboard reporting is made available to the board of the
fund on a monthly basis, or more frequently if a significant issue
arises between report dates.
2. Liquidity Risk
For each fund that it manages, CFMI adopts procedures which
enable it to monitor liquidity risk. We monitor liquidity risk at both
the portfolio (assets) level as well as at fund (shareholder) level.
We analyse portfolio liquidity by both geographic region and
by asset class and we regularly conduct stress tests under both
normal and exceptional liquidity conditions.
Comprehensive dashboard reporting is produced and shared
with the board of the fund on a monthly basis.
Investment Management
We have procedures in place to ensure and verify that the investment
policies and strategies of each fund are being complied with.
Using Statpro, we perform performance analytics independent of
the portfolio manager. We do not rely on the portfolio manager to
provide us with separate reporting, thus insuring independence of
information being reported to the board of the fund. However, if
we do find discrepancies we will contact the portfolio manager to
discuss.
A full range of absolute and relative analytics are produced on the
system, using highly visual dashboards, charts and analysis tables.
Analytics include:
–– Performance returns
–– Asset allocations
–– Contributions
–– Risk adjusted returns
–– A full range of risk analytics / ratios, including VaR, exposure,
volatilities
–– Attribution analysis, on both top down and bottom up bases
–– Calculations are also supported for multiple asset classes.
Dashboard reporting is produced and shared with the fund
board on a monthly basis as shown below:
Regulatory Compliance
Distribution
We maintain a permanent and independent compliance function
with a robust compliance framework, including logs which track
complaints and errors.
We monitor ensure that the fund is being distributed correctly in
three ways:
We have developed an automated system which generates the
full suite of Annex IV (AIFMD) reports as well as a system which
calculates and monitors the funds SRRI number (UCITS) each day.
1. We carry out a site visit to the lead distributor (usually the
Investment Manager) every 12 to 18 months. This visit covers
a number of different areas but includes 30 questions around
distribution including:
We maintain a schedule of all fund reporting requirements and
monitor that the fund has complied with its various reporting
requirements including:
–– jurisdiction where the fund is being sold
–– Financial Statement filings
–– controls around the appointment of any sub-distributors
–– Annual PCF confirmations
–– distribution channels
–– Annex IV Reporting
–– complaints
–– KIID filings
2. Monthly compliance reporting from the lead distributor
–– FATCA & CRS Reporting
3. Distribution Matrix – we maintain a list of the countries where
the fund is registered for distribution. This list is then crossreferenced against the shareholder register of the fund, with
any anomalies queried with the lead distributor.
–– Minimum Capital Requirements Report
–– Any ad-hoc regulatory returns
–– controls around marketing material
Our management company is networked with a large number of
distribution platforms and can help assist with the onboarding
arrangements.
Capital & Financial Management
Organisational Effectiveness
Each management company must maintain €125,000 as the
minimum initial amount of capital.
According to the Central Bank’s guidance, the purpose of this
new role is to ensure that there is an independent director within
the fund management company who has the specific task of
keeping the effectiveness of the organisational arrangements of
the company under ongoing review, with his or her reports being
submitted to the board for discussion and decision.
Where the total value of the funds under management exceeds
€250,000,000, the management company must provide an
additional amount of capital equal to 0.02% of the amount by
which the net asset value exceeds €250,000,000. So, if a fund
gets an additional subscription or subscriptions of €100m, then
the management company must add another €20,000 to capital.
It is critically important that when choosing
a 3rd party management company that an
appropriate analysis of the company’s ability
to meet its capital requirements, both now
and in the future, is carried out.
In the guidance, the Central Bank gives some non-exhaustive
examples of the types of matters which the independent director
undertaking the organisational effectiveness role will be
involved in:
–– monitoring the adequacy of a fund management company’s
internal resources to its day-to-day managerial roles;
–– reviewing the organisational structure of the fund management
company and considering whether it remains fit for purpose;
–– considering the conflicts of interest affecting the fund
management company and its investment funds under
management and initiating action, such as escalation to the
board, where these are having or are likely in the near future to
have an adverse impact;
–– reviewing the board composition and reporting on this to the
board;
–– organising periodic board effectiveness evaluations; and
–– overseeing how well the decision taking by the fund
management company and the arrangements for the
supervision of delegates are working in the interests of
investors.
For a fund that has appointed a 3rd party management company
such as CFMI, this role falls on the Chairman / Independent
director of that management company and not the fund itself.
Capita’s AIFM solution
CFMI have a solution in place to help investment
managers with the regulatory requirements
as set out by the Alternative Investment Fund
Manager’s Directive (AIFMD or The Directive).
We differentiate ourselves from other providers
by our institutional strength, substance,
systems and experience. We have developed a
comprehensive governance framework, saving
you time and money in the ongoing monitoring
and reporting to the regulatory authorities.
Our solution enables fund managers to concentrate on their core
tasks of portfolio management and asset raising. It also allows
for the fund boards to dedicate their time in a more effective
manner, free from chasing reports or information from a number
of different sources.
CFMI satisfies the requirements under AIFMD by retaining the Risk
Management function and delegating the Portfolio Management
function to the investment manager. Legal agreements setting out
the usual provisions of duties, responsibilities, termination notice
etc are signed between the AIF board and CFMI and between CFMI
and the investment manager.
Some of the key elements of our AIFM offering include:
Risk Management
As required by the Directive, the functions of risk management
must be functionally and hierarchically separate from
the operating units, including the function of portfolio
management.
As AIFM, CFMI undertakes the permanent risk management
function, providing the fund structure with a robust framework
which meets the requirements of the Directive.
Remuneration
The Directive requires all AIFMs to have a remuneration policy
in place, to ensure that the compensation arrangements of all
staff that could materially impact the risk profile of the AIF do
not encourage excessive risk-taking which is inconsistent with
the risk profiles, rules or instruments of incorporation of each
AIF it manages.
The remuneration provisions set out in the Directive and
detailed in the ESMA guidelines apply to the AIFM’s “Identified
Staff”, which comprises members of the AIFM’s Board (both
executive and non-executive), senior management and officers
of the AIFM, staff whose activities may have a material impact
on the risk profile of the AIFs under management, as well as
staff whose total remuneration package brings them into the
same category as senior management.
CFMI has a well-developed remuneration policy in place which
complies with the AIFMD. For each new delegate or investment
manager that is to be appointed, we will determine whether their
remuneration policies are subject to regulatory requirements
that are equally as effective as those in the Directive.
There is a certain element of proportionality that can be
applied to the implementation of the remuneration provisions
of the Directive, taking into account the size, internal
organisation of the AIFM and the nature, scope and complexity
of their activities. Ultimately, however, it is the board of the
AIFM that is responsible for the remuneration policies and for
ensuring that there is no circumvention of the requirements.
Regulatory Reporting
We have built an automated solution to facilitate meeting
our AIFM obligations imposed under the Directive for
both EU AIFs and for non-EU AIFs marketed in the EU.
The Directive lays out the regulatory reporting periods
which vary depending upon the size of the AIF. Reports
are generally due no later than one month after the end
of the relevant period.
The reporting includes, inter alia, a break-down of financial
instruments and other assets, the principal exposures
and most important concentrations of each AIF and the
diversification of the AIF’s portfolio.
Authorisation process
Once appointed as AIFM, we will work with the portfolio
manager, legal counsel and the board of the AIF to ensure
a smooth implementation. As CFMI is already approved
by the Central Bank of Ireland, the process is relatively
straightforward and provides a quicker access to market
than would otherwise be achieved via an internally
managed AIFM or by setting up a new AIFM.
It is important to note that the portfolio manager does
not require separate authorisation from the Central Bank of
Ireland. Once all contractual arrangements are in place, an
Irish Qualifying Investor Alternative Investment Fund (QIAIF)
can receive authorisation from the Central Bank of Ireland
within 24 hours.
We will project manage the onboarding process and provide
the portfolio manager with a checklist of what will be
required in order for CFMI to become the AIFM. We will
also work closely with the legal firm of the AIF to ensure all
amendments and changes to the fund documentation satisfy
the Directive.
Designated function support
For funds that have already been set-up as Self-Managed
Investment Companies (SMIC’s), or who have their own
management companies, we can assist by providing the
necessary support and team that runs our management
company to ensure that the increased governance
requirements are met.
Appointed under a services agreement we carry out the same
monitoring and reporting to the board of the fund.
When appointing an independent third party AIFM a
number of factors need to be considered and carefully
reviewed, in respect of that third party namely:
–– Size of balance sheet
–– Experience and track record
–– Substance and resources
–– Independence
–– Governance model
–– Risk management and systems
–– Depositary relationships
So why Capita?
Reduces risks and reduces costs
A dual UCITS and AIFM licence
You will benefit from economies of scale, particularly when it
comes to keeping pace with the cost of reporting and managing
regulatory change.
We have an attractive proposition for managers who hold UCITS
funds and Alternative Investment Funds (AIFs), where one central
point of contact can handle the multiple regulatory requirements
for both fund types.
Speed to market
We are authorised by the Central Bank of Ireland, which means
your product will get to market quicker than other application
routes.
Maintain the required regulatory
capital
There is no need to worry about capital adequacy as we maintain
the required regulatory capital thus avoiding tying up your capital.
Fund Directors time commitments
We take on all the managerial function roles, removing the
requirement for fund directors to act as designated persons and be
involved in the day-to-day running of the fund.
Our management team
Paul Nunan, is Managing Director of Capita Financial Managers (Ireland) Limited
and Capita Financial Administrators (Ireland) Limited
Paul worked on establishing these businesses for Capita when it first setup in Ireland in March
2006. Prior to this, he held senior positions in other fund administration companies and has
over nineteen years’ experience working in the funds industry. Paul is a qualified ACCA.
Michael Greaney, Financial Director
Michael joined Capita in July 2006 as Financial Controller. Prior to this, Michael spent seven years
with ABN Amro in various senior roles. He was seconded to ABN Dublin in 2005 to act as Deputy
CFO, having previously headed up their Shared Services operation in Manchester.
Previously Michael has also held similar roles in West Landesbank and Lloyds TSB. He has twenty
years’ experience working in Financial Services, has a Bachelor of commerce degree from NUIG and
is a qualified ACA.
Vincent Smyth, Legal Counsel
Vincent joined the company in March 2007. He has over fifteen years’ experience in a number
of legal and governance roles in both industry and practice including Deloitte, Global Asset
Management and Investors Trust Europe.
Vincent is a Graduate and Associate Member of the Institute of Chartered Secretaries and
Administrators and holds an Honours Diploma in Legal Studies, an advanced Diploma in White
Collar and Regulatory Crime and a First Class Honours Barrister-at-Law degree from the Honourable
Society of King’s Inns, Dublin. He also holds a Diploma in Finance Law (Merit) and a Diploma in
Aviation Financing and Leasing both from the Incorporated Law Society of Ireland.
Paul Phelan, Compliance Officer
Paul is Compliance Officer for CFMI and joined in September 2012. Before joining he was Head
of Compliance and Risk Management at Admiral Administration (Ireland) Limited (now Maitland
Administration (Ireland) Limited) since June 2007.
Paul has more than 15 years’ experience working in financial services and holds a Bachelor of Arts
degree in accounting and finance from Liverpool John Moores University, a Professional Certificate
in Financial Crime Prevention from University College Dublin, and is also a qualified Accounting
Technician and Licentiate of the Association of Compliance Officers in Ireland.
Ronan Doyle, Senior Manager of CFMI
Ronan joined Capita in November 2012 as Senior Manager of CFMI. He previously worked
for JPMorgan Bank (Ireland) plc for 12 years and held various managerial roles including Fund
Accounting Operations Manager, presiding over US$120bn assets under administration and Trust
& Fiduciary Client Service Manager. Ronan has over sixteen years’ experience in the Irish funds industry and holds a Bachelor of Business
Studies Degree from the University of Limerick and is a qualified ACCA.
Joe O’Donnell, Head of Investment Risk
Joe is the head of investment risk for CFMI, having joined Capita in January 2014. He previously
worked for Prescient Investment Managers (formerly AIB Investment Managers) and held various
managerial roles. Joe has over twenty seven years’ experience in financial services, and holds a Bachelor of
Commerce Degree and Master of Business Studies Degree (Banking and Finance) from
University College Dublin. He is a member of the Irish Funds Industry Association (IFIA)
Risk Committee, and is the Ireland Country Sponsor representative in the Global Investment
Performance Standards (GIPS) initiative.
Our Services
UCITS
Manco
Transfer Agency
Management
Company AIFM
Fund
Administration
Corporate
Secretarial services
KIID Production
Annex IV
Reports
SRRI
calculations
ONR Central
Bank Reporting
Capita have over 40 years’ experience in the funds industry and are
dedicated to building and maintaining strong partnerships to align our
service offering with your business needs.
With a range of services that combine our specialist knowledge with the backing
of a FTSE 100 company, we are committed to supporting asset managers and
controllers of financial assets. In an ever-changing regulatory environment you
can rely on us to provide expert solutions that help you successfully grow your
business.
Capita Asset Services is a trading name of the following companies. Capita Financial
Managers Limited, Capita Financial Investments Limited and Capita Financial Administrators
Limited which are authorised and regulated by the Financial Conduct Authority, Capita
Financial Administrators (Ireland) Limited and Capita Financial Managers (Ireland) Limited
which are authorised by the Central Bank of Ireland, and Capita Sinclair Henderson.
Contact us
Damian McAree
Head of Business Development
t: +353 1 224 0529
e:[email protected]
www.capitaassetservices.com
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